Hoteliers Face Prospect of VAT Boost Following European Court Ruling
September 5, 2011 by Davenports Tax Team
Filed under Accountancy News
Hoteliers could be in line for a bumper VAT bonus following a ruling by the European Court regarding no-shows.
Before the decision, the UK tax authorities took the view that when a guest with a reservation fails to turn up or contact the hotel to cancel his or her booking, the guest still had a right to use the room. This, argued HM Revenue & Customs (HMRC), meant that the room had been supplied and the money the hotel received should be subject to VAT as normal.
However, the European Court ruling states that such income should be treated in the same way as forfeited deposits.
Barry Laurie, tax partner in the Edinburgh office of chartered accountants French Duncan LLP, who works with hotel groups, said: “The decision means that although VAT is charged as normal when the money is received, as soon as it becomes clear that is effectively a cancellation charge the VAT can be reclaimed.”
HMRC has now accepted the change, which could open the door to thousands of claims for VAT rebates stretching back as far as four years.
“It is now recommended that hoteliers should go back over their books and check where VAT has been paid on no-shows to determined how much overpriced tax they were due,” said Laurie.
“Since this decision radically alters the tax status of cash received by hoteliers for no-shows, it is important that they scrutinise their records for the past years and prepare a properly documented claim.
“Hoteliers should also be checking cases where deposits have been forfeited as a result of a booking cancellation because the court ruling means that they are effectively compensation, and thus outside the scope of VAT.”
The ruling could also apply to cancelled restaurant bookings, as long as the table is not specific and the charge represents compensation for breach of contract.
“However, I would expect HMRC to challenge this treatment as the case was in respect of hotel bookings and they don’t tend to see the wide picture without a fight,” added Laurie.
Story from Caterer Search
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HMRC Help For Customers Affected By Civil Disorder
August 12, 2011 by Davenports Tax Team
Filed under Accountancy News
HM Revenue & Customs (HMRC) has today announced a single helpline number – 0845 366 1207 – to help businesses and individuals adversely affected by the recent civil disorder.
HMRC is determined to do all it can to help, and may be able to do this in a variety of ways.
The dedicated Civil Disorder helpline is available to provide comprehensive advice and deal sympathetically with problems currently faced by businesses and individuals. In particular, HMRC will:
- agree payment schedules with those who are unable to pay their tax bills due to short-term financial difficulties; and
- discuss practical solutions where businesses and individuals cannot meet their other obligations to HMRC – for instance, their records have been lost or destroyed in the disturbances.
In these circumstances, and whenever possible, HMRC will review any penalties imposed and withhold additional surcharges that would normally be triggered by missed deadlines.
In short, if you want to talk about how the disorder has affected you in relation to the tax system (including tax credits), please contact HMRC – we are here to help. There are a range of existing reliefs available and HMRC’s trained advisors will be happy to help.
HMRC’s Civil Disorder helpline will be available from 8.00am to 8.00pm, seven days a week.
To help deal with your query more efficiently, callers should have the relevant taxpayer reference number to hand e.g. Unique Taxpayer Reference (UTR) for Self Assessment customers, or VAT number for VAT-registered businesses.
HMRC Tackles London’s Fast Food VAT Dodgers
July 20, 2011 by Davenports Tax Team
Filed under Accountancy News
A new taskforce to tackle VAT abuse in London’s fast food outlets was announced today by HM Revenue & Customs (HMRC).
HMRC has identified that there is a problem with some fast food outlets deliberately falsifying their records and mis-declaring their true sales levels in order to avoid paying the correct taxes.
Mike Wells, HMRC’s Director of Risk and Intelligence, said:
“This taskforce will come down hard on fast food outlets that have chosen to break the rules and evade the taxes they should be paying. Honest businesses have absolutely nothing to worry about.
“This taskforce comes hard on the heels of one launched last month targeting the restaurant sector in London. If you deliberately seek to evade tax HMRC can and will track you down, and you’ll face not only a heavy fine, but possibly a criminal prosecution as well.”
This is the 4th taskforce launched by HMRC since May 2011. HMRC is planning a further nine taskforces in 2011/12, with more to follow in 2012/13. The taskforces come as a result of the Government’s £900m spending review investment to tackle tax evasion, avoidance and fraud from 2011/12, which aims to raise an additional £7bn each year by 2014/15.
If you are aware of someone who is evading their taxes you can tell HMRC via the Tax Evasion Hotline by phone on 0800 788 887, via the email hotline, or by post full details can be found at www.hmrc.gov.uk
VAT Cheats Targeted in Crackdown
July 5, 2011 by Davenports Tax Team
Filed under Accountancy News
As part of a campaign launched today aimed at VAT rule-breakers, HM Revenue & Customs (HMRC) will be sending letters informing businesses how to register to pay what they owe. The new campaign focuses on individuals and businesses trading above the VAT threshold of £73,000 turnover but who have not registered for VAT.
More than 40,000 letters will be sent out over the next few weeks. Under the terms of the VAT Initiative, those who have not registered to pay VAT can come forward any time up to 30 September to tell HMRC that they want to take part. If they make a full disclosure, most face a low penalty rate of 10 per cent on VAT that has been paid late.
They will also be invited to disclose any other tax arrears. Where they have to pay a penalty on undeclared tax other than VAT, this will be lower than the customary penalty of up to 100 per cent charged to those who fall outside the opportunity.
After 30 September, using information pulled together from different sources, HMRC will investigate those who have failed to come forward. Substantial penalties or even criminal prosecution could follow.
Mike Wells, HMRC’s Director of Risk and Intelligence, said:
“This is our third campaign, raising more than £500m from voluntary disclosures and a further £100m so far from follow-up activity.
“Our campaigns are designed to ensure tax is paid so that the money is available to spend on public services used by everyone.
“The aim is to make it easy for individuals and businesses to contact us, make a full disclosure of their income and face a reduced penalty on any tax owed.
“I urge people who have not registered their businesses for VAT to get in touch with HMRC and get their tax affairs in order simply and on the best available terms.”
To use the VAT Initiative people and businesses must:
- Register with HMRC by 30 September to “notify” that they plan to make a voluntary VAT disclosure;
- Tell HMRC about VAT due and make arrangements to pay it, as well as any penalties due, by 31 December.
How to let HMRC know of the intention to make a tax disclosure:
- Online by completing a notification form at http://www.hmrc.gov.uk/ris/vat/
- Ring HMRC on 0845 600 5217
A dedicated team is available to give information and advice.
Previous HMRC campaigns have targeted offshore investments, medical professionals and people working in the plumbing industry.
For assistance with your VAT obligations, contact Davenports today using the simply form below:
LibDems Plan £1m Property Sales Tax
June 24, 2011 by Davenports Tax Team
Filed under Uncategorized
The Liberal Democrats are drawing up plans for capital gains tax (CGT) to be levied on the sale of homes worth more than £1m in exchange for their support for the scrapping of the 50p tax rate.
Senior LibDems will tell chancellor George Osborne that the scheme must be implemented before the next election if he wants to abolish the 50p tax rate, the Daily Mail reports. Business secretary Vince Cable suggested previously that there should be a 1% annual levy on all homes worth above £1m.
Under the scheme, the 28% CGT rate will be levied on profits over and above the £1m threshold. Around 250,000 homes would be above the £1m threshold and last year 7,185 properties were sold for a seven figure sum.
The Mail also reports that VAT on home improvements could be reduced to 5% to encourage owners to renovate rather than sell, while stamp duty could be scrapped for lower earners.
Article from AccountancyAge
Company cars - advisory fuel rates from 1 June 2011
May 26, 2011 by Davenports Tax Team
Filed under Accountancy News
HM Revenue & Customs has published new advisory fuel rates effective from 1 June 2011 and are available on the HM Revenue & Customs website:
http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm
The rates are now to be reviewed four times a year. Any changes will take effect at the beginning of each calendar quarter – on 1 March, 1 June, 1 September and 1 December and will be published on the HM Revenue & Customs (HMRC) website shortly before the date of change.
In view of the increased frequency of review, HMRC will no longer consider changing the rates if fuel prices fluctuate by 5 per cent from the published rates.
Employers should make themselves aware of any changes by referring to this page in late February, May, August and November each year. It is the primary source of information.
VAT
Customs will also accept the figures in the table for VAT purposes though employers will need to retain receipts in line with current legislation.
Taxman’s “Tactical” Withdrawal From Court Battle Could Harm Recruiters
May 26, 2011 by Davenports Tax Team
Filed under Accountancy News
The Taxmans’s expected decision to not appeal against a VAT tribunal ruling it lost has been described as a clever “tactical move” could harm the recruitment agent industry.
Reed Employment won a first tier tribunal in March in which it argued that it should only pay VAT on the commission fee charged to clients, and not the entirety of the charge.
HM Revenue & Customs has not confirmed whether it will appeal the decision. But Hannah Dobson, VAT director of Smith & Williamson, said that HMRC sources have indicated it will not appeal.
“This is a fantastical tactical ploy,” Dobson said. “A case through the first tier tribunal is only persuasive on others, and not binding. HMRC will turn around and say no-one else can rely on the ruling, it only applies to Reed.
“We cannot have Reed being allowed to operate in one way in an industry and everyone else in another. But that said, I think HMRC will challenge anybody else that is thinking of operating like Reed. It is in a position where it can challenge others.”
This will mean that recruitment businesses will be out of pocket for “another 12 to 24 before another court case comes out”, she added. “It has potentially delayed any repayments of VAT to anybody but at least another two years.
“If this had been binding, any client that had gone back to the temporary agency and asked for VAT back, the agency could have gone to HMRC and HMRC would have paid it back,” she said
Business Entertainment
April 11, 2011 by Davenports Tax Team
Filed under Accountancy News
With effect from 1 May 2011 input tax is no longer blocked in respect of business entertainment of overseas customers “of a kind and on a scale which is reasonable, having regard to all the circumstances”. It is expected that HMRC will interpret this latter condition strictly.
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Emergency Budget Date Announced
May 17, 2010 by Davenports Tax Team
Filed under Accountancy News
The Treasury has confirmed that newly appointed Chancellor George Osborne will present his emergency Budget on Tuesday 22 June, less than six weeks after taking power.
The new Chancellor made the announcement in his first Treasury press conference, in which he also confirmed another Conservative manifesto commitment to create an Office for Budget Responsibility (OBR).
Moving quickly, Osborne said the OBR would be an independent entity like the Monetary Policy Committee that would be responsible for developing “a truly independent assessment of the state of the nation’s finances”. The OBR will be set up initially on a non-statutory basis and be headed by economist Sir Alan Budd. Along with Geoffrey Dicks and Graham Parker he will form a Budget Responsibility Committee and get to work on the forecasts immediately.
The OBR will be put on a statutory footing in next week’s Queen’s speech. For each subsequent Budget and Pre-Budget Report the OBR will confirm whether the government’s policy has a better than 50% chance of achieving its objectives.
Explaining his reasons for the move, Osborne said: “Over the last 13 years the public and the markets have completely lost confidence in government economic forecasts. The last government’s forecasts for growth in the economy, over the past ten years, have on average been out by £13bn. Their forecasts of the budget deficit three years ahead have on average been out by £40bn.”
Previous Chancellors rather than independent officials were responsible for the forecasts and fell victim to the temptation to “fiddle the figures “ by nudging up growth forecasts and reducing borrowing figures to get the numbers to add up, he argued. The government would still set overall fiscal goals and tax and spending policies, but to rebuild public trust , independent forecasts will become the norm, he added.
“I am the first Chancellor to remove the temptation to fiddle the figures by giving up control over the economic and fiscal forecast. I recognise that this will create a rod for my back down the line, and for the backs of future chancellors. That is the whole point. We need to fix the budget to fit the figures, not fix the figures to fit the budget.”
With the £160bn+ deficit uppermost in his mind, Osborne said Treasury assessments confirmed it would be feasible to put £6bn of reductions in place for this year without damaging frontline services. Departmental secretaries ahve been told to resubmit all their pilot schemes and spending plans approved since 1 January to the Treasury. Those that give good value for money and fit the government’s priorities will go ahead, but no more money will be wasted on those that do not.
The emergency Budget will set out the fiscal path and will contain measures to boost enterprise, create a fairer tax system, and demonstrate to the world that Britain is open for business, he added.
The actual content of the 2010 Budget Mark Two will provide plenty of scope for speculation and interpretation among accountants. Last week, Simon Sweetman put forward the following contenders:
- VAT will go up to 20% - it’s fast and would raise lots of money. At the Treasury press conference, prime minister David Cameron said it was “not something we plan to do” but added that taxpayers would have to “wait for the first Budget” to find out if it would happen.
- The main rate of CT will be cut (possibly with the abolition of the small companies’ rate and of the annual investment allowance to pay for it).
- Increase in the rate of CGT on non-business assets - possibly from the day of the Budget. Tax Editor Rebecca Benneyworth anticipates the change due to concerns about the current 32% differential between CGT and the new 50% upper band for income tax, which makes it tempting for high earners to shift their income into capital.
- Employees’ NIC will go up, but not employers’ NIC.
- The personal income tax allowance will increase in the general direction of £10,000.
- The increase in the IHT nil-rate band won’t happen.
The leftovers hanging around from Alistair Darling’s 23 March Budget include the dealing with agents – deliberate wrongdoing legislation. Consultation was extended on the draft clauses until 28 April. The new government has shown itself to be sympathetic to the profession’s concerns. But even with two former PwC employees on the Treasury team, there has been no word yet what view they have taken on this.
While the Tories have fulfilled their pre-election promise to create the OBR, there is no news yet about the planned Office of Tax Simplification (OTS) and its review of small company taxation and IR35. Osborne said he would provide a further update on his activities in a speech to the CBI on Wednesday, or perhaps the OTS might be a surprise he’s saving for the accounting community until 22 June.
As far as symbols go, Osborne has reverted to the more traditional choice of a Tuesday to present his statement, after Gordon Brown opted for Wednesdays early in his period as Chancellor.
From AccountingWeb
Sage Warns of VAT Change Complications
November 25, 2009 by Davenports
Filed under Accountancy News
Two thirds of businesses could be leaving preparations for VAT changes too late warns financial software giants.
Sage has warned businesses to prepare for the VAT changes or face the consequences.
The financial software provider has found that just a third of businesses will be prepared for the VAT changes before they close their offices for the Christmas period.
The VAT rate will return to 17.5% on 1 January 2010 causing disruption to accountancy firms and businesses in the New Year.
“This is cause for serious concern - managing the change for something as integral as VAT is not as easy as simply flicking a switch. In fact, it can be hugely complex for businesses both small and large,” said Kevin Hart, head of government relationships at Sage UK & Ireland.
“Those that fail to plan the changes now will pay the price later,” he added.
When the VAT rate was reduced this year, businesses were given just four days to prepare for the amendments. Sage has said that its VAT development team and support staff had to work around the clock to prevent widespread disruption.
There are special arrangements being drafted for certain businesses operating beyond midnight on 31 December.
Sage is advising its clients to get in touch with their accountants as soon as possible to discuss how the changes will impact them.
Accountancy Age
