The case concerned a company that made supplies of medical care and prostheses to patients in hospitals. The company contended that it made separate supplies of exempt healthcare and zero rated prostheses and therefore could claim input VAT on the purchase of the prostheses.
HMRC have not been able to finalise their review of salary sacrifice lease cars in the NHS to date, but have recognised the need to address the situation by issuing some interim guidance which should be implemented from the October return.
On 24th March, HMRC released a policy paper confirming that the Prime Minister has secured agreements with other officials at the March European Council to welcome increased flexibility for member states in relation to the zero and reduced rates of VAT. Whilst this was primarily related to the abolition of the ‘tampon tax’ – the increased flexibility could present an opportunity for the UK to reconsider other demands – like the ECJ ruling which suggested that the reduced rate on energy saving materials was in breach of EU laws.
Normally, as a result of the first section in the VAT Act 1994 – a supplier is liable for accounting for VAT on the supplies of goods or services he makes. However – in certain cases, the customer is responsible for charging themselves VAT on a supply they have received (as outlined in an order made by the Treasury). This is effectively an anti–fraud measure which reduces the opportunity for fraudsters to charge VAT and then ‘disappear’ before paying it over to HMRC (referred to as Missing Trader Intra-Community Fraud – MTIC).
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.
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.