VAT Current Issues Rebecca Benneyworth MBE BSc FCA 2020 Group Webinar
Place of supply changes 1 January 2015 Change in place of supply for EBT services to consumers ◦ Electronic ◦ Broadcasting ◦ Telecommunications Cross border, INTRA – EU ◦ Home supplies unaffected ◦ Non EU supplies unaffected ◦ B2B supplies unaffected
Electronic services Supplied over the internet or a similar network Usually downloaded No or very little human intervention in the supply A growing range of supplies
What is not an electronic supply Where a person is needed to complete the supply ◦ Advice etc given in writing delivered electronically ◦ Webinars presented live But download pre-recorded probably is ◦ Electronic examinations which are marked by a person But if marked by the machine it is an e-service
Who makes the supply? Selling through an app store or other portal? Is the supply to the portal operator? ◦ Probably yes, so not MOSS implications Or the customer/consumer? Most of the big portals are making the consumer supply so your client is OK ◦ A business reason for choosing to supply through a portal in spite of the reduced income
Advice regarding distribution Where the platform operator: ◦ Sets general T’s & C’s for the consumer ◦ Authorises payment or delivery ◦ Does not clearly state the name of the supplier on the receipt or invoice to the customer Then the platform operator is making the supply Your client is making B2B and not affected
Is the customer a consumer? Safest test is that provision of a VAT number is NOT a consumer Could assume that all others are consumers ◦ Remember that VAT limits everywhere else in the EU are very low Can rely on other evidence that someone is a business customer ◦ But may need to satisfy the VAT authorities in the member state concerned
Place of supply : B2C Before the change : where the supplier belongs From 1 January : where the customer belongs ◦ Permanent address, or ◦ Where they normally reside
HMRC presumptions Phone box, internet café, wifi hotspot ◦ Where the place making the supply is located On transport in cross border travel ◦ Point of departure T elephone landline ◦ Where the landline is situated Mobile phone ◦ Country code of SIM card Decoder ◦ Where decoder is located
Determining where the supply is made If one of the presumption cases you need evidence of location (a single piece of evidence) If not one of the presumptions ◦ Two pieces of non contradictory evidence If rebutting a presumption ◦ Three pieces of non contradictory evidence Transitional rule – for first 6 months – one piece of evidence
What sort of evidence? Billing address of customer IP address of customer’s device Location of their bank Country code of SIM card Location of fixed landline Other commercial information
VAT Invoices and rates Need to use the Europa website HMRC dubious about preparing a list of rates ◦ Europa is regarded as the “source” ◦ BUT MOSS pages do include a list of rates and link to europa Table of rates and details about tax invoices in the notes but as of Feb 2015
VAT invoices Follow the rules for the member state of supply Member states cannot require the issue of full tax invoices for cross border B2C supplies But some may require a less detailed tax invoice to be provided Table on page 6 helps
Supplies made in currency You will be reporting for MOSS in home currency (£ sterling) Translate transactions undertaken in other currencies into sterling at the ECB rate on the last working day of the reporting period MSI – Member state of Identification – home state of the supplier
The Union Scheme - MOSS UK VAT registered businesses only ◦ But extended – see below ◦ The non union scheme is for countries outside the EU If client is not UK VAT registered, they need to register for UK VAT ◦ They will not be required to account for UK VAT on their supplies ◦ Do not recover UK input tax unless it relates directly to the cross border electronic supplies
MOSS registration A voluntary or optional scheme The “long hand” is to register in individual member states and make returns direct to them If choose to leave MOSS then cannot re- join until two calendar quarters have passed
MOSS registration - dates Register for MOSS by 10 th day of month after relevant supplies started Registration will be backdated to date of first relevant supply If late then registered from next VAT MOSS quarter So register today for supplies from 1 July – effective 1 July 2015
Chucked out of MOSS? Practical disaster for business making supplies across EU Submit returns and payments on time Reminders for payment sent out for three successive quarters which are unpaid after 10 days ◦ Persistent failure to comply ◦ Excluded
Moss returns Calendar quarter returns ◦ Due 20 days after end of quarter Return in sterling (end of quarter date) Shows each member state Value of supplies at standard and lower rate Amount of VAT Payment due at the time the return is due
Payment of MOSS VAT Due by the end of the submission period ◦ That is, within 20 days Quote reference number of return ◦ Issued when return accepted No direct debit facility No time to pay agreements Must clear HMRC’s bank by due date
Practicalities Register for MOSS (this will enrol you in online system) Obtain data Prepare and submit return Take note of reference number Make payment quoting reference number T o arrive with HMRC by 20 th of month
Other Gems Records must be retained for ten years after 31 December of the year of the transaction Correct errors on the original return ◦ But need to know time period for correction in each member state Penalties arise in individual member states Cross border agreement not to have inspections in “close succession”
MOSS – other developments Think about data protection registration ◦ May be covered by accounting exemption but just be aware UK lobbying for a threshold to exclude small suppliers ◦ Will have to be a unanimous approval ◦ Many member states do not see it as a problem ◦ Suggested level € 1,000 or € 5,000
Prompt payment discount New requirement to raise invoice for gross amount from 1 April 2015 Either issue credit note for prompt payment discount (PPD) Or adjust in accounting records – but see the detailed requirements to permit this Sample invoice as an appendix to the Brief
Construction services - Zero Dwelling Adapting Relevant Charity New residential Annexe Construction use Home for disabled person Relevant charitable use
Construction services – 5% Energy saving materials Installation Support Aids for for over Empty disabled 60’s dwellings Conversion Non Different residential number
Relevant residential Childrens ’ home Residential care home with personal care for the elderly, disabled, mental health condition, drug or alcohol addiction Hospice Students and school pupils Armed forces accommodation Monastery or nunnery Institution – sole or main home of at least 90% of residents
Construction services Zero rate new construction of “relevant residential property” Includes accommodation for school pupils and students Change of interpretation ◦ Generally recognised academic or professional qualification ◦ Maintaining existing professional qualification for which accreditation is received ◦ High level of academic content
T ermination of concessions Disregard use during vacations in determining use ◦ Big change for new build halls of residence Kitchen and dining rooms to count as residential accommodation if predominantly used by live-in students Both ended 1 April 2015
Golf club bonanza? Bridport and West Dorset Golf Club successful at CJEU Green fees to non members are also exempt ◦ Not permitted to discriminate between recipients of the supply Reclaims possible Unjust enrichment – so repay non members Adjust input tax claims
Road fuel Road fuel private use – the third way! Changed in 2013 Now three choices ◦ Recover 100% VAT and pay scale charge ◦ Recover 0% VAT ◦ Recover x% of VAT based on detailed mileage record (of ALL miles travelled) In practice the third option is probably unworkable
Entertaining overseas customers Reasonable in the circumstances Non UK = not UK or IoM resident Avails himself of the goods or services supplied by the business or is likely to do so
Retention of small interest If there is a sale and a tiny interest is retained can the sale still be a TOGC? Robinson case – a property business Grant a sublease of 125 years – 3 days from a primary lease of 125 years Was this still a TOGC Tribunal – yes it is ◦ So no output tax due, and reduced SDLT
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