HMRC have recognised the difficulties small businesses making supplies of digital services to consumers in other EU member states, and have introduced some simplifications to assist. Firstly – businesses which are below the UK VAT registration threshold will now be allowed to rely on any single piece of information (for example, the address provided but the customer) to determine the location of their customer. This differs from the normal rule – which is that a business must collect two pieces of non-contradictory information to evidence their customer’s location.
The One Show 17th December 2015 again highlighted time taken by HMRC to respond to queries. This followed an admission from Linda Homer, Chief Executive of HMRC, in October that response times were poor and that only half of telephone enquires made between April & June were answered.
Alternative suggestions to use e-mail & Twitter were found by The One Show to be equally ineffective, and a potential barrier to those not familiar with digital media; notably the elderly and potentially poorer tax credit applicants. A Tweet submitted during The One Show, remained unanswered 30 minutes later at the close of broadcasting.
This week HMRC have announced their intention to introduce a new section, 33E of the VAT Act 1994, to prevent VAT being a barrier to non-departmental public bodies who enter into arrangements to share back office services that would otherwise result in greater efficiencies. This puts the VAT position for government departments, NHS bodies and non-departmental public bodies on a similar footing. In line with the other departments who are able to claim similar services under section 41 (3), they will have a shorter period in which to claim a refund.
HFMA have released minutes from their September VAT Technical Sub-Committee meeting. Please find below a summary of the key points.
Contracted Out Services Guidance
The minutes confirmed that the latest HMRC guidance was released on 12 October 2015, and HMRC stated in the meeting that telephony (including VOIP) is not included within Heading 14: Computer Services.
As you may be aware – earlier this month HMRC released the final tranche of COS headings (though more guidance is expected to be released on Heading 52 at a later date). Unfortunately, it was not immediately explicit as to the period for which this guidance applies.
We have received confirmation from HMRC that the threatened retrospective repayments for pre April 2014 Heading 69 adjustments have been withdrawn. You will recall that Customs were considering re-visiting ‘Typing, secretarial, telephonist & clerical services’ where Trusts had (mistakenly) used this heading to reclaim the VAT on basic admin & clerical staff.