As always, there are many interesting points to pick up on, including case law reminding us of the VAT Penalties Regime and how it applies in the case of an understated HMRC assessment.
HMRC Digital Services Update - including VAT deferral new payment scheme
HMRC has issued an update in relation to its digital services.
The May update covers:
- Making Tax Digital (MTD)
- Trust Registration Service (TRS)
- VAT deferral new payment scheme
The VAT deferral new payment scheme is open for all businesses who deferred paying VAT due between 20 March and 30 June 2020 and have been unable to pay in full by 31 March 2021.
HMRC stress that businesses with outstanding VAT due should apply as soon as possible to spread these payments. The later you join, the fewer instalments will be available to you.
You can join the easy-to-use scheme quickly and simply online by 21 June, without needing to call HMRC. To find out more, including what you need to join online, go to GOV.UK and search 'VAT deferral'.
Simplifying the VAT Land Exemption – HMRC call for evidence
Published 12 May 2021, HMRC acknowledges the complexity of the existing VAT rules on land and property and would like to hear views from businesses on the practical application of the current rules, and whether these rules could be simplified.
The call for evidence is split into two sections, with specific questions attached to each paragraph, and condensed together in Section 4:
- the first section (Section 2), looks at the history of the VAT land and property rules, highlighting how they have become increasingly complex over time. It considers factors that are driving the need for simplification
- the second section (Section 3), discusses possible solutions for the issues caused by the current complicated nature of the VAT rules for land and property
Responses should be sent by 3 August 2021 (11.45pm) by email to firstname.lastname@example.org
HMRC Update - Change to VAT treatment of roller blinds
“Revenue and Customs Brief 5 (2021): VAT liability of installation of blinds – First-tier Tribunal decision” was issued on 11 May.
This brief explains HMRC’s policy concerning the VAT treatment of installation of blinds following the First-tier Tribunal’s decision in Wickford Development Co Ltd (Wickford) (Decision No TC2017/08197 and TC2018/03555).
In particular, it clarifies that HMRC accepts that manual blinds are considered building materials for the purposes of construction services. It also explains that DIY house builders can use a refund scheme to claim VAT charged on manual blinds prior to this ruling. If you think this may apply to you, please get in touch and we will be happy to talk through your specific fact pattern.
HMRC Update - VAT liability of juice cleanse programmes
“Revenue and Customs Brief 6 (2021): VAT liability of juice cleanse programmes” was issued on 17 May.
This brief explains HMRC’s policy concerning the VAT treatment of supplies of juice cleanse programmes following the Upper Tribunal decision in The Core (Swindon) Ltd Decision No UT/2019/0049 (‘The Core’), which upheld the original decision of the First-Tier Tribunal.
The issue in this case was whether the sale of juice cleanse programmes were standard-rated beverages or zero-rated meal replacements.
HMRC accepts that products designed specifically as complete meal replacements (and so provide users with the necessary calories and nutrients of a meal) can be zero-rated. These include meal replacements in liquid form to be used as part of a slimmer’s diet and certain products to promote weight gain in convalescence. Such products are normally regulated by legislation and may be given under medical supervision or on prescription.
HMRC Update - VAT liability of charging of electric vehicles
“Revenue and Customs Brief 7 (2021): VAT liability of charging of electric vehicles” was published on 25 May 2021.
This brief explains HMRC’s policy concerning the VAT treatment of charging of electric vehicles, when using charging points situated in various public places.
In particular it clarifies that the standard rate of VAT applies to supplies of electric vehicle charging through charging points in public places. It also explains when input tax can be recovered for charging electric vehicles for business purposes.
HMRC acknowledges within the brief that it has received requests from businesses and their representatives to clarify the rules in specific cases, and in particular to confirm if supplies of electric vehicle charging at charging points in public places should be charged at the reduced rate of VAT. There may be more to follow on this in the coming years.
UK Case Law: Faye Elizabeth Harrison v Revenue and Customs  UKFTT 111 (TC)
This case concerned the application of VAT penalties issued under Schedule 24, Finance Act 2007 by HMRC for the taxpayer’s failure to notify HMRC of understated assessments. The Tribunal considered whether the taxpayer should have known assessments prepared were understated, whether the taxpayer had taken reasonable steps taken to notify HMRC of the understatement of assessments, and whether there were any special circumstances which could alter the application of Penalties in this matter. The tribunal found in favour of HMRC and dismissed the appeal of the taxpayer.
This case serves as a timely reminder of the application of the Penalties Regime, and also demonstrates that a HMRC issued assessment does not indemnify a taxpayer from their obligations to check it is correct, and rectify their VAT accounts where it is insufficient.