Bevan VAT Welcomes Sarah Addison

Firstly, I’m delighted to introduce you to our new team member, Sarah Addison.

Sarah started with us on the 1st January 2024. Coming from a Finance background, having previously worked in the health and social care sector, she is now pursuing a career in the world of VAT. 

Sarah is working with Hilary as her mentor, in order to gain valuable knowledge. She will soon be providing expert VAT advice on a range of topics.

Online Dispensing of Contact Lenses

An article I wrote for AccountingWeb this month covered a dispute between Vision Direct Limited and HMRC. The case was looked in to by the First Tier Tribunal (FTT), who were to decide whether the online dispensing of contact lenses should be VAT exempt.

This was an interesting case, to read more and find out the outcome of the tribunal, please read the full article.

VAT Grouping Application Update

HMRC has updated the guidance in VAT Notice 700/2 about what to do whilst waiting for a group VAT registration application to be processed. They now say:

“If you are waiting for a response to your VAT grouping application, you should treat the application as provisionally accepted on the day it is received by HMRC and account for VAT accordingly. For more information on accounting for VAT in a VAT group read section 5.

The date of receipt should be treated as, if sent online the date it was sent, or if it was posted the date it should be received by HMRC through the ordinary course of post.

If you have not been issued with a group VAT registration number, you cannot charge or show VAT on your invoices until it has been assigned. However, you’ll still have to pay VAT to HMRC for this period. You should increase your prices to allow for this and tell your customers why. Once you’ve got your VAT number you can then reissue the invoice showing the VAT. More guidance on this can be found in who should register for VAT (VAT Notice 700/1) section 5.1.

If you had a VAT registration number before your grouping application, you should not send returns under this number and should follow this guidance.

While you are waiting to receive your VAT grouping registration number, you may receive:

• an automated assessment letter
• letters asking for payment of any automated assessments
• notification of a late submission penalty because you have not filed your tax return
• notification of late payment penalties and late payment interest because you have not paid the automated assessments by the due date.
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If you do, you will not need to take any action in response to any of these notices because HMRC will automatically cancel them once your application is fully processed. HMRC will not take recovery action for any debts which come about as a result of you following this guidance, though other VAT debts may still subject to recovery actions.”

VAT and School Fees

A few people have been asking about ways to mitigate against the potential impact of private school fees becoming liable to VAT. This article from Tax Policy Associates is a useful summary of the potential options and pitfalls.

Screening of Live Performances – The Debate continues

Recently I wrote about the Derby Quad tribunal case concerning whether the live screening of theatre and arts performances in to cinemas should be classed as cultural events or cinema. The importance of the matter being that the former are exempt from VAT.

In this case the tribunal had ruled that such screenings should be classed as cinema, largely because performers are unaware of an audience’s response to and behaviour during such a performance.

As the FTT is not binding for other cases, and can be appealed, this issue is not settled. It is further discussed in the article linked below. The discussion features my own concerns about the nuances surrounding this particular issue.

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