Whilst we eagerly await the outcome of the HM Treasury’s ‘VAT and the Public Sector: Reform to VAT Refund Rules’ paper and consultation, (in which a full-VAT refund model is to be explored) a new Treasury Directive has been released expanding the current Contracted-Out-Services (COS) direction
Following EU Tribunal Cases (VAT being a European Tax and largely unaffected by Brexit); HMRC have changed their stance on many forms of compensation payment – and with particular regard to the Construction Industry – how Liquidated Damages are treated.
For a number of years HM Treasury have been considering potential reforms to the Contracted-Out-Services – numbered 1 through to 76 – which you will be familiar with from our reports. As a quick recap these rules [Section 41 VATA94] are the mechanism with which NHS and Government Departments (GD) reclaims VAT on certain outsourced services.
HMRC have updated their guidance today to confirm that all businesses, regardless of annual turnover, will be required to register for Making Tax Digital as of 1st April 2022. This will extend to any businesses which have registered voluntarily for VAT.
Another bit of good news for the NHS – the Court of Appeal has recently supported the Upper Tribunal’s previous decision that lease cars provided under a salary sacrifice are not a supply for VAT purposes (as a result of the ‘de-supply’ order – “Value Added Tax (Treatment of Transactions) Order 1992 SI 1992/630”).
The Chancellor has today announced that the Hospitality and Tourism sectors will benefit from a substantial reduction of the standard rate of VAT from 20% to 5% for a period of six months (Wednesday 15 July 2020 through to Tuesday 12 January 2021).