February 2022 VATwatch

Delays in HMRC processing Group VAT Registrations

As some of you will be aware, there are currently significant delays in HMRC processing forms in relation to VAT Group Registrations. It seems they are currently dealing with forms submitted last summer.

HMRC has released some guidance as to what to do in relation to VAT reporting if you are waiting for forms to be processed. 

VAT on Electric Vehicles

Further to my notes last month on the VAT treatment of charging electric vehicles, on 6 January 2022, HMRC updated its guidance in VAT Notice 700/64 – Motoring expenses.

The update added guidance on the recovery of input tax on the costs of charging electric vehicles.

On the same day, HMRC published Revenue & Customs Brief 1/2022 announcing that it was reviewing the options for recovering input tax on the costs of charging electric vehicles that was given in Revenue & Customs Brief 7/2021 after receiving representations concerning the limited options in that Revenue & Customs Brief.

The review is looking at the recovery of input tax where an employee charges an electric vehicle at home and claims for the cost from their employer. The current guidance says this input tax is unrecoverable as the supply is made to the employee.

HMRC responds to Media Claims

HMRC has published some responses to what they consider are inaccurate media claims.

One of those is that “customer” service levels have been impacted by staff working from home. HMRC reassures us that there has been no impact as a result of home working during the pandemic and that, in face, service levels have improved.

I am not 100% certain how this is reflected in the 7 month waiting time for changes to current group registrations, the 5 months delay on options to tax, and the 5 months turnaround for error correction claims, which is what my clients are currently experiencing. 

New Penalty System Delayed

HMRC has announced the postponement of the start date of the new penalties for VAT registered taxpayers by nine months to 1 January 2023, which will allow more time for testing the IT systems.

The new penalty regime was due to come into effect for VAT on 1 April 2022. 

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