Further to my colleague Roger’s comments in his blog of 30 April 2007, the High Court has recently overturned the Tribunal’s decision in part. The decision of the High Court was that the “enrolment fee” paid by members at the first meeting could be apportioned to reflect the printed matter element (zero rated leaflet/books etc). However, the fees paid for the subsequent weekly meetings were consideration for a single supply of “weight loss management services” which is standard rated.

The taxpayer appealed the decision in relation to subsequent meetings and HMRC cross appealed in relation to the first meetings. The Court of Appeal has recently issued its judgement which confirms that all fees paid by members are standard rated as a single supply.

This case demonstrates that it is becoming increasingly difficult to apportion income in cases of “apparent” mixed supplies.

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Following Lord Carter’s recommendations for increasing the use of online services, HMRC are planning a number of changes to its VAT Online services.

Currently it is possible to register for VAT and submit VAT returns online but the take up level is relatively low. This is despite the fact that online VAT registration tends to be quicker than the paper option and by submitting VAT returns online, businesses are allowed an extra 7 calendar days for the submission/payment of any VAT due. Payment of the VAT must be made by electronic means i.e. BACS/CHAPS, direct debit and bank giro credit transfer.

With effect from October 2008, HMRC will be extending its existing “Billpay” system to include VAT. This means that businesses who submit returns online will also have the option of paying online using a debit card.

Other proposals for the future include mandatory online filing of VAT returns for all newly VAT registered businesses and those already VAT registered with a turnover above £100,000. The proposed implementation date for this change is 1 April 2010, with the expectation that paper filing will be phased out completely by 2012.

HMRC are keen to involve businesses in the need for other changes/improvements to the VAT online service (such as the viewing of historical VAT return data online). Therefore, they have commissioned research into the extent and nature of the use of this service and the needs of those who will be accessing the system (particularly small and medium sized enterprises). They are also seeking views/comments from businesses and their advisers in general. Any comments should be e mailed to auriel.smith@hmrc.gsi.gov.uk .

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We reported on 28 April 2008 that new rules were to be introduced in relation to the option to tax (“OTT”) for land and buildings.

These new rules come into effect on 1 June 2008. HMRC have now issued a revised Notice 742A (June 2008). This Notice sets out the new rules and also replaces Information Sheet 03/08.

There are also a number of new and revised forms which are detailed at Annex 1 of the Notice and available to download from HMRC’s website.

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It is a fairly common misconception that charities are relieved from paying VAT. In reality, charities are subject to the same VAT rules as any commercial organisation, although there are a number of specific reliefs for certain supplies made to and by charities. For many years, charities and associated groups have made representations to the government to allow charities to reclaim the irrecoverable VAT which they incur. This has so far been unsuccessful. Therefore, if a charity’s taxable business income breaches the VAT registration threshold, it has to register and account for VAT in the normal way.

Charities will normally have a complex VAT position as they will be receiving a mixture of business income (taxable and exempt) and non business income. They may also set up a trading subsidiary to carry out any significant trading activity. This can lead to a complicated VAT recovery position, as VAT incurred on costs has to be attributed to the relevant income stream and will either be fully recoverable, irrecoverable or partly recoverable. There are a number of different ways of undertaking the VAT recovery calculations, with scope for improving VAT recovery rates by adopting the most advantageous method. However, the benefit of implementing a “special method” has to be weighed against the cost of implementing and undertaking the calculations for such a method. The use of a special method also has to be agreed in advance with HMRC. Methods have to produce a fair result and be easily checked.

Charities do benefit from certain VAT reliefs, including advertising, donated goods, aids for the disabled/handicapped and certain types of buildings. The charity will have to certify that zero rating applies. Again the conditions/rules are very precise and advice should be always be sought in cases of doubt.

Charities are increasingly finding new ways to raise funds and as a result, it is more likely that they will enter into activities/transactions which may have VAT consequences. For example, two charities working together in “partnership” may inadvertently create a VAT cost when recharging each other for services. Advice should always be taken when entering into new contracts or amending existing contracts. Unfortunately HMRC do not take a lenient approach to charities which make errors in their VAT returns and penalties/interest may be imposed.

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We reported in our blog of 16 April that there was likely to be further litigation in relation to whether pension funds should benefit from VAT exemption in relation to investment management services.

It has now been announced that the National Association of Pension Funds (“NAPF”) and Wheels Common Investment Fund (Ford/Jaguar/Land Rover group pension fund) will bring a joint challenge against HMRC at the tribunal. If this challenge succeeds, pension funds could submit VAT refund claims for the past 3 years and also for the period 1990 to 1996 in the light of the recent House of Lords Judgement in the Fleming and Conde Nast cases. The main beneficiaries will be private sector defined benefit pension schemes with segregated investments.

As previously advised, these pension funds should be discussing this issue with their fund managers and submitting protective claims as appropriate. Any rejected claims should be re-submitted to stand behind this appeal.

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The recent Budget announced changes to the rules for opting to tax property interests. Further details have now been published (BB24/08 and 03/08). The changes are due to come in on 1 June 2008 when the new legislation (rewritten Schedule 10 VAT Act 1994) becomes effective.

The changes are designed to simplify the complex rules and address some of the practical issues which have arisen since the option to tax was first introduced in 1989.

A summary of the main changes are:

• New rules for relevant associates (VAT groups)
• Certificates to disapply an option to tax for land sold to housing associations and buildings converted into dwellings
• New rules for intermediaries supplying buildings to be converted into dwellings
• Introduction of a “real estate election” (new way to opt to tax multiple property interests)
• Changes to the “cooling off” and revocation period
• Changes to the rules for obtaining permission prior to opting to tax
• Revised definition of “occupation”
• Changes to the scope of the option to tax
• New appeal rights
  

The new rules and changes are quite detailed and will mean that businesses should review their internal procedures, particularly those with large property portfolios. Further simplification changes are also expected.

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The European Court decision in Securenta has again cast doubt on the recovery of VAT on share issues and focused attention on the VAT position of holding companies.

Securenta was a German investment company dealing in land, acquiring financial holdings in other businesses and managing various other investments. It raised the necessary capital partly by means of an issue of shares. The ECJ ruled that VAT on the costs connected with the issue of shares was allowed only to the extent that the expenditure was attributable to economic activities. Non-economic activities where there was no right to deduct presumably included much of the investment activity undertaken such as acquiring, holding and selling shares and bonds.

Guidance on how HMRC will apply this decision is still awaited. Holding companies often incur significant legal and accountancy costs when issuing new shares and this case may make it more difficult to recover all of the VAT involved. Wherever possible holding companies should be part of a VAT group with their trading subsidiaries as this hopefully should minimise the impact of the decision.

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HMRC has published new guidance on the new penalty provisions that will apply from April 2008.

HMRC states that it has designed the new penalties so that:

• If people take reasonable care when completing their returns they will not be penalised.
• If they do not take reasonable care errors will be penalised, and the penalties will be higher if the error is deliberate.
• Disclosing errors before HMRC find them will substantially reduce any penalty due.

The new penalties initially apply to VAT, PAYE, National Insurance, Capital Gains Tax, Income Tax, Corporation Tax and the Construction Industry Scheme.

Further information can be found at:
http://www.hmrc.gov.uk/about/new-penalties/penalties-leaflet.pdf
http://www.hmrc.gov.uk/about/new-penalties/faqs.htm  

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In a response to an EU consultation, the ICAEW has called on the EU to reduce the administrative burdens on SME’s. One of the key areas of focus is VAT.

Whilst welcoming a number of recent changes which assist SME’s, the ICAEW highlights that VAT is the “single most burdensome tax area” according to a study carried out in 2006 by KPMG on behalf of HMRC.

In particular, the ICAEW has called for immediate action in relation to cross border services (extension of “one stop shop” principle recently introduced for certain services). It has also called for a resolution to the double taxation issues currently experienced by many SME’s.

The EU is due to finalise its proposals in June 2008.

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We reported in our blog of 2 November 2007 that VAT exemption for fund management services in relation to Investment Trusts (following the decision in the JP Morgan Claverhouse Investment Trust plc case) could extend to other types of investment vehicles, such as pension funds.

In November 2007, the European Commission published its proposals for a new VAT regulation to define VAT exemption for financial services. Under these new proposals, special investment funds would include pension funds.

The recent Budget also announced changes to the current UK VAT exemption with effect from 1 October 2008.

As we said in our earlier blog, it is still likely that there will be further litigation on whether a pension fund should always have been considered to be a special investment fund. Many pension funds and fund managers have already submitted protective refund claims, in view of the three year capping rules.

The EU proposals have not yet been adopted but it is thought likely that the pension fund changes will be implemented. This will have an impact on both pension funds and pension fund managers. It will be important to check contracts to assess whether VAT changes are covered.

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The ECJ has recently ruled that M & S should get its long awaited £3.5 million VAT refund. For those of you not familiar with this case, M & S have been litigating for many years to obtain a full refund of VAT charged in error on chocolate teacakes between 1973 and 1994. The UK tax authorities had refused to repay this VAT on the grounds that M & S would be “unjustly enriched” as it had passed 90% of the VAT overpaid on to its customers.

M & S was in a VAT payment position (that is, it owed HMRC money after deducting the VAT it paid from the VAT it charged). Prior to 2005, the UK tax authorities treated “payment” and “repayment” businesses differently in relation to unjust enrichment. This was found to be discriminatory and contrary to the EU principles of fiscal neutrality and equal treatment.

The European Court has referred the case back to the House of Lords in the UK for a final judgement.

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Has the recent ECJ court judgement Ministero dell’ Economia e delle Finanze v Part Service Srl  put another nail in the coffin of VAT planning? Until now, HMRC have reluctantly accepted that it is not possible to have a single supply for VAT purposes where there are two suppliers involved.

This case involved an Italian car leasing group which also provided finance to its customers. One company in the group leased the vehicles and another provided the finance elements. The group treated the finance element paid by the customer as exempt from VAT. The Italian tax authorities took the view that the amounts payable by the customer had been artificially split in order to reduce the VAT payable. The matter was then referred to the ECJ to determine whether (1) there can be an “abusive practice” under the principles established in the Halifax case when a tax advantage is the principal aim of a transaction or whether it has to be the sole aim to the exclusion of other economic objectives and (2) whether the transactions in this case could be considered to be abusive.

On the first question the Court ruled that there could be a finding of an abusive practice where a tax advantage constituted the principal aim of a transaction. On the second question, i.e. whether the structure in this case was abusive, the matter was referred back to the Italian National Court to apply the tests set out in the Halifax decision. However, the ECJ indicated that the legal and economic links between the suppliers and the apportionment of payments made by the customer indicated that this was an artificial structure put in place principally to reduce the VAT payable.

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The recent Budget announced that the “staff hire concession” used by employment businesses will be withdrawn with effect from 1 April 2009. 

This concession allows employment agencies to account for VAT solely on their margin when supplying temporary workers. This reduced VAT cost benefits those exempt/partly exempt sectors who cannot recover all of the VAT they incur, e.g. banking and insurance, private healthcare sector, charitable and certain educational /public sector bodies.

The UK government decided to withdraw this concession following changes introduced by the new Conduct Regulations in 2004. The concession has also been used for tax avoidance purposes. An extended period of review and consultation of the impact of these changes then occurred.

With effect from 1 April 2009, VAT will become due on the full consideration received from the client. As such, partly exempt businesses which employ temporary staff will suffer an increased VAT cost.

The delayed implementation date is to allow businesses to deal with the impact of the change, e.g. contracts may have to be renegotiated/systems changed etc. HMRC will continue to discuss the impact of the change with affected businesses.

Not all employment businesses use the concession, although it is widespread amongst the largest players in the market. However, if you currently use temporary staff and are paying VAT on the margin, your VAT cost will increase from next year. If you are able to reclaim VAT in full, this will only represent a cash flow cost.

You should be discussing this issue with your temporary staff provider now.

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The main VAT changes announced in the Budget today are;

1. With effect from 1 April 2008, the annual VAT Registration/deregistration limits have
   increased to £67,000/£65,000 respectively. 
2. Revised fuel scale charges will apply for VAT return periods beginning after 1 May 2008.
3. A transitional period has been announced for VAT refund claims to 31 March 2009. This follows recent litigation relating to the three year capping rules introduced in 1996/7.
4. Withdrawal of the staff hire concession with effect from 1 April 2009.
5. A package of simplification measures for the option to tax.
6. Extension of the VAT exemption for fund management services.
7. The limits for correcting errors on VAT returns have increased from £2,000 to the greater of £10,000 and 1% of turnover.
   
   Full details of these changes will be contained in our Budget Tax Bulletin to be issued shortly.
   
   

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My colleague Cathy Corns recently outlined the new penalty regime for both direct and indirect taxes to be introduced next year. This new regime will potentially mean that businesses will face higher penalties for errors in VAT return periods with a due date after 1 April 2009.

Under the current VAT rules, if a business discovers an error before HMRC has begun to make enquiries, it can either make a voluntary disclosure or where the VAT is less than £2,000, it can adjust the amount on the VAT return. By doing so, the 15% misdeclaration penalty (triggered when an error breaches certain thresholds) will automatically be waived. Also, a penalty will not apply where a business can convince HMRC that it has a “reasonable excuse” for the error. Under the new regime, the concept of “reasonable excuse” will no longer be grounds for waiving a penalty.

Instead, HMRC will determine the quantum of a penalty by reference to the amount of VAT at stake, the nature and behaviour of the offence that lead to an understatement of VAT and the extent of the disclosure by the business.

There has been no confirmation so far that VAT errors below £2,000 cannot continue to be adjusted on the VAT return, under the new regime. However, it may prove necessary to write to HMRC to disclose any error, regardless of the size and reason, even when the error can be put on the VAT return. This would avoid the potential for a 30% penalty for making “careless” errors.

Hopefully HMRC will confirm this point nearer the time. Watch this space….

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... is expected to take effect for periods starting after 31 March 2008 where the return is filed after 31 March 2009.

The new system distinguishes between different types of tax “offence” for example, heavy penalties for evasion, but an acknowledgement that genuine errors happen.

HMRC appears to want to encourage compliance and sees penalties as an essential element in enforcement.

The result is that the new penalties will apply to returns for income tax, corporation tax, pay as you earn, national insurance contributions and VAT.

The new regime seeks to grade the penalty to match the ‘offence’. There are effectively four categories:

• Innocent mistake; 
• Careless conduct; 
• Deliberate action, but not concealed; and 
• Deliberate action with concealment.
  

Innocent mistakes will no longer attract a penalty. The penalties for the other three conducts are laid down with prescribed reductions for disclosure (differentiating between prompted and unprompted). The proposed penalties range from 15% to 30%, for a prompted disclosure for ‘failure to take reasonable care’, to 100% of the tax due for a ‘deliberate understatement with concealment’.

It will be “interesting” to see how HMRC will distinguish between innocent mistakes and a ‘failure to take reasonable care’. This is likely to be an area for debate, dispute and potential litigation.
You should be aware that unprompted disclosures will reduce penalties to nil for potentially minor offences.

Additionally, in cases of ‘failure to take reasonable care’, HMRC has the discretion to apply a suspended penalty. If the correct procedure is implemented and adhered to, the penalty could be cancelled.

One thing that is clear is that a lot of businesses and individuals will be affected.

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HMRC have now issued Business Brief 07/2008 inviting businesses to submit claims for both input tax accrued before 1 May 1997 and also output tax claims for accounting periods prior to 4 December 1996.

There is no time limit for submission of these claims but if you have a claim, prompt action should be taken.

Further announcements are expected.

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If you are involved in providing cross border services, you may be affected by future changes to the place of supply rules under a “VAT package” agreed by the European Commission in December 2007.

Broadly the new rules (to take effect from 2010) will change the place of supply of “business to business” services to the place where the customer is situated. Supplies of services to consumers will continue to be where the supplier is established. However, there will be special rules (“one stop shop”) for telecoms, broadcasting and electronic services to consumers (delayed until 2015).

The package will also introduce a much needed improved system for businesses seeking refunds of VAT paid in other Member States. The EU VAT refund system will become fully electronic from 1 January 2010 thus ensuring a quicker and easier process. This is a very welcome change. For those of you who are familiar with the current paper system, it is extremely burdensome and can take 6 months or more to obtain VAT refunds from other countries. Under the new system, interest will be paid if Member States are late making refunds!

We will keep you informed of the changes as these become available.

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A recent decision in the case of Livewire Telecom LON/06/1365 has demonstrated the complexity of VAT fraud cases involving carousel fraud.

The appellant was a wholesale broker (exporter) of mainly new mobile phones. In the course of selling such phones, the company made the relevant checks on both suppliers and customers and the unique phone reference numbers “IMEI”. However, in 2006, HMRC refused to make a significant repayment of input tax on the basis that it suspected that the business was knowingly involved in “contra trading” in respect of 14 transactions. “Contra Trading” involves two separate supply chains, one “clean”, the other “dirty”. The dirty chain will include a “missing trader”. In this case, the appellant was part of the clean chain but HMRC claimed that it was knowingly involved in a carousel fraud.

The tribunal decided, on the evidence available, that the due diligence process of the business appeared to be flawed. However, the appellant could not have (nor ought to have) known of the fraud at the time the transactions took place. Interestingly the tribunal was also critical of the way HMRC presented its evidence and made suggestions as to how this could be improved for future cases.

Other businesses which have had input tax claims refused may now seek millions of pounds of VAT refunds.

HMRC are considering whether to appeal the decision.

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Have you had input tax (or output tax) claims capped by HMRC at 3 years? If so, a recent House of Lords Judgement will be of interest to you.

The judgements in two similar cases Conde Nast and Fleming have ruled that the introduction of the 3 year cap with effect from 1 May 1997 was in breach of the principles of Community law as it did not allow the taxpayer a reasonable transitional period in which to submit refund claims. As such it must be disapplied. This opens up the period for submission of old and new claims.

The Lords ruled that a prospective transitional period should now be allowed in order for taxpayers to make claims. Futhermore, as the three year cap has been ruled to be defective, this means that even taxpayers who have not yet submitted claims for input tax incurred before 1 May 1997 will have the opportunity to do so. It is not known how long the transitional period will be, but it could be as short as six months.

Therefore if you have had input tax claims capped in the past, you should now revisit these claims as a matter of priority. When the details of the transitional period are announced, such claims should be re-submitted.

This judgement also calls into question the position following the Marks & Spencer case (relating to overpaid output tax). It may also be possible that the transitional period for output tax claims could be "reopened". Therefore, any output tax claims (overdeclared VAT in the periods prior to 4 December 1996 ) which have been capped by HMRC should also be revisited.

Watch this space for further details...

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Further to my colleague Roger Bell’s comments in his blog posted on 30 April 2007, the High Court has recently overturned the Tribunal decision that part of the fee could be apportioned to reflect the printed matter element (zero rated leaflet/books etc).

The Court has now ruled that the fee paid for the weekly meetings is consideration for a single supply of “weight loss management services” which is standard rated.

This demonstrates that it is becoming increasingly difficult to apportion income in cases of “apparent” mixed supplies.

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With effect from 1 January 2008, renovations and alterations to residential properties that have been empty for at least 2 years will be eligible for a reduced VAT rate of 5%.

Further information on this reduced rate can be found by clicking here.

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Do you use business assets for private or non business purposes (e.g. a yacht/aircraft/computer)? Are you aware that you have a choice as to how the VAT paid on the purchase of such assets is treated?

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As my colleague reported in August, businesses have been experiencing very lengthy delays in obtaining a VAT number. This was due to a backlog of applications with HMRC, due in part to increased checks to try and eliminate “carousel fraud”.

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My colleague Roger Bell reported in July this year on an important European Court of Justice (ECJ) case involving the VAT treatment of fund management services.

The Times and the Association of Investment Companies today report that HMRC has withdrawn its appeal in the case of JP Morgan Claverhouse Investment Trust plc/Association of Investment Trust Companies v HMRC.

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Are you involved in sales promotion schemes? If so, you may be interested to hear of two recent Court of Appeal decisions which will affect the VAT treatment. These cases are the latest in a long line of cases dealing with business promotion schemes.

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Do you use or provide a computer for home working? If so, you may not be aware of a change in HMRC policy.

Following the removal of the tax exemption for the loan of computer equipment by employers to employees (Home Computer Initiative (“HCI”)), HMRC have issued Business Brief 55/2007 which sets out the revised VAT policy in relation to computers provided by employers to employees who work from home.

Previously HMRC had been happy to accept that any private use of such computers could be ignored and that full VAT recovery was allowed. However, with effect from 15/8/07, HMRC will look for evidence that it is “necessary” for the employer to provide the computer in the first place. If this evidence is not available, then an apportionment of input tax will be required to reflect any private use element. It may be possible to agree a fixed percentage with HMRC.

Businesses providing computers under an existing HCI agreement can continue to reclaim full VAT until the agreement has expired (normally 3 years).

In practice, would a business provide a computer to employees unless it was necessary for them to carry out their duties? And how do you monitor the level of private use? Therefore, it seems that the best approach would be to argue that any private use is insignificant and should continue to be ignored.

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Are you involved in the international supply chain? If so, you may be becoming increasingly aware of the new AEO status due to be introduced on 1 January 2008.

AEO is a measure being introduced to improve global security in the supply chain. AEO certification will be recognised by customs authorities across the EU that a business is a reliable trading partner. It is not mandatory but accreditation may lead to less customs checks and improved clearance times for goods.

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A further ramification of the well publicised ‘carousel fraud’ has led to many SME clients facing long delays in routine VAT registrations.

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You will recall that currently the transfer pricing regulations apply mainly to large businesses (more than 250 employees and either turnover >in excess of euro 50m or assets in excess of euro 43m) on a UK to UK as well as UK to overseas basis.HMRC retain the right to challenge transactions in medium sized business but not small ones (small being less than 50 employees and either turnover or assets less than euro 10 million).

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Investment trust companies (ITCs) are celebrating their victory at the European Court of Justice on 28 June when it was ruled that the term “special investment funds” can include closed-ended investment funds, such as ITCs. As a consequence they should benefit from the same exemption from VAT for fees paid for management services, as presently enjoyed by unit trusts and OEICs..

The case was brought by JP Morgan Fleming Claverhouse Investment Trust plc and The Association of Investment Companies. The Association say investment trusts have been unfairly charged VAT on management expenses since 1990

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H M Revenue & Customs have announced new advisory fuel rates which can be used by businesses to reclaim VAT on employees mileage allowances for business travel.

The new rates which apply to all journeys on or after 1 August 2007 are as follows:-

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Should HMRC pay you compound interest on VAT repayments? The House of Lords is due to hear the case of Sempra Metals Ltd v HM Commissioners of Inland Revenue on 16 May which although concerned with advance corporation tax will, it is thought, also have implications for VAT repayments.

HMRC have always paid simple interest on tax repayments but “Community law requires full compensation for the loss of the use of money; and full compensation for the loss of the use of money requires that interest is compounded…”. Not my words but those of Chadwick LJ in the Court of Appeal. If HMRC lose their appeal in the Sempra case prepare to revisit old repayment claims. It may well be that you can make a supplementary claim for additional sums of interest.

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Those of you who are overweight may have considered joining the Weight Watchers
programme but have probably not thought about the VAT implications!

Customers are asked to attend weekly meetings at which they are weighed. They are given an initial handbook, a monthly magazine and weekly leaflets. In 2004 Customs issued a ruling to Weight Watchers UK Ltd that part of the consideration paid by customers could be attributed to this zero rated printed material. In 2005 they withdrew this advice and ruled that the company was making a single supply of a standard rated weight loss programme and that it had to account for VAT on all the takings.

The company appealed and in March 2007 a VAT Tribunal allowed the appeal, holding that the company was making multiple supplies and that the consideration should be apportioned.

Whilst this is good news, it does illustrate one of the most difficult areas of VAT – when you bundle together goods or services with differing VAT rates, are you genuinely making multiple supplies at different rates or as HMRC will usually argue citing the case of Card Protection Plan, a single supply with the other items being merely ancillary or incidental to the main supply. We would be interested to hear of your own experiences in this area.

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H M Revenue & Customs have issued more guidance on the new declaration that is required to accompany all applications to use a special method for VAT partial exemption from 1 April 2007.

You are required to declare that to the best of your knowledge and belief the special method you are proposing “fairly and reasonably represents the extent to which goods and services are used or to be used in making taxable supplies”. A template for making the declaration has been given in HMRC Brief 23/07. See www.hmrc.gov.uk/briefs/vat/brief2307.htm

But what is fair and reasonable? If HMRC approves a method but subsequently decide that the method being used gives excessive input tax recovery they can override the method and retrospectively recalculate the affected VAT returns. Great care therefore needs to be taken by the person signing the declaration to satisfy himself that he is fully aware of the result the proposed method will have on all areas of the business and that it is “fair” to both the business and the Treasury. Call me cautious but I am not sure I would want to sign this. “Fairness” is a matter of opinion.

HMRC expect this to raise £20 million in 2007/08, so they clearly intend to challenge many of the methods proposed. Will the risk of a later challenge mean there will now be fewer applications?

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The European Commission is trying to standardise VAT invoices ( just invoices?) throughout Europe and the UK Government has agreed to make a number of changes to our regulations by August 2007.

The changes will affect:

• The numbering of invoices – they will need to be sequential based on one or more series which uniquely identify the document. Don’t we already do this?
• Cross border invoices to business customers in other Member States where the supply is exempt or where the customer applies the reverse charge procedure – the invoice will need to show the VAT treatment; and 
• Invoices issued under the margin scheme for second hand goods and the Tour Operators Margin Scheme- the invoices will need to identify the scheme used.

The Joint VAT Consultative Committee have asked for comments on the draft regulations and the estimated costs to business of making the changes. See www.hmrc.gov.uk/news under 14 March.
I suggest you read this before ordering any new stationery! 
 

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