This month, we are very excited to announce the launch of The VAT Ready Club, a members’ club for our accountant clients.

For a monthly subscription, members will be able to access the following benefits:

• Advice relating to ad-hoc VAT queries
• Factsheets on various topics available to download
• Members will be invited to a virtual meeting once a month. The plan at the moment, is that 1/3 of these will be on a set topic (a bit like a webinar) and 2/3 will be a more open VAT clinic type set up where members can ask me questions.
• A digital badge to include on your website, showing that you are a member of The VAT Ready Club

This is something totally new for us and it is a work in progress so do please get in touch if you have any suggestions or questions.

We’ll be launching a web-page over the next few days which will contain more information about how you can join.

The Upper Tribunal Case of Hippodrome Casino Ltd (HCL)

It is a fundamental principle of VAT, that VAT on costs can only be recovered to the extent to which it relates to making onward VATable supplies. Where a cost is incurred that relates to both exempt income and VATable income, a proportion of that VAT can be recovered (residual input VAT). The standard method is usually applied, meaning, for example, that where 40% of sales are VATable, 40% of the VAT incurred as residual input may be recovered. Where this standard method does not give a fair result based on actual use, the standard method override may apply.

HCL proposed a standard method override should be applied to their dual use of hospitality and entertainment areas based on floor space, and HMRC refused it because, in their opinion, the floor space method used by HCL was fundamentally flawed because it proceeded on the false premise that the bars, restaurants and entertainment areas were used only for the making of VATable supplies.

You can read about the case in my article, here:

Item 1 and 2 to Group 8, Schedule 9 of the VAT Act 1994 provide exemption from VAT for the disposal of the remains of the dead and for the making of arrangements for, or in connection with, the disposal of the remains of the dead. The provision of goods and services not directly connected with the making of such arrangements does not fall within the exemption and is therefore a taxable supply at the standard rate of VAT. 

On the 29th February ’24 HMRC confirmed the position regarding the provision of live streaming of funeral, burial and cremation services as falling within the exemption. Any tax incurred by an undertaker, cemetery or crematorium operator on the costs of overheads of providing such a supply is however, not normally recoverable. Normal rules will apply. Furthermore, where such live web streaming services is supplied by a third party for a separate consideration, that web streaming does not fall with in the scope of the exemption and will be subject to the standard rate of VAT.

If VAT has been previously charged or claimed incorrectly, then an adjustment can be made on the VAT Return.

A further update to the Tour Operators Margin Scheme (TOMS) has arisen as CIOT and other professional body representatives recently attended a meeting with HMRC to discuss the experiences and insights of those applying the scheme since the UK left the EU. In addition, attendees were asked their thoughts on what desirable changes should be made and HMRC were open to high-level discussions around what possible changes would allow the simplification of TOMS. Any future amendments would be subject to a public consultation in due course; however, the discussions marked a significant point in the drive for change and improvement.

HMRC are also engaging with other industry representatives on this topic and if you have any feedback, or ideas on the changes you would like to see for TOMS, please contact technical@ciot.org.uk.

HMRC U-Turn

Earlier last month HMRC announced that it would be making permanent cuts to the VAT and PAYE helplines. They confirmed the VAT helpline would be open for 5 days every month ahead of the deadline for filing VAT returns but outside of such days customers would be directed to use HMRC’s online services. The PAYE helpline would no longer be available to customer queries relating to refunds, such enquiries would again need to be directed to the online services.

They received a number of vehement responses from across the profession ranging from extreme disappointment to outrage. Thankfully, on the 20th March HMRC performed a U-turn to the relief of many.

Thank you for taking the time to read this VATwatch round-up.