July 2022 VATwatch

Holidays

Please note that the office will be closed on the following dates:

·       Week commencing 4^th July

·       Week commencing 5^th September

Tax Writing

I have recently added a new string to my bow and started doing some tax writing for AccountingWEB. 

If anyone has any feedback, or suggestions for future topics, do let me know. 

Changes to Business v Non-Business Rules

For charities, one major challenge has always been how to establish whether income is non-business income, and so outside the scope of VAT, or business income subject to VAT rules (although potentially exempt).

For years, the principles laid down in the case of Lord Fisher have been relied on, with 6 criteria to be considered.

On 1 June, HMRC released a brief setting out a 2 stage test to be used instead. 

This is a significant change and the brief should be read by any not-for profit organisations.

Option to Tax Notification

As you may be aware, HMRC has had a huge backlog, particularly in the option to tax department. Recently, taxpayers have been experiencing delays of several months before getting a reply.

From 30^th May, a new trial has begun, intended to last 6 weeks, with the aim of speeding up the notification process.

Before the trial, when an option to tax notification was received, HMRC would carry out a number of checks.

During the trial, HMRC will continue to acknowledge the notification but will no longer acknowledge its validity. As such, the option to tax acknowledgement letter received from HMRC will become an acknowledgement of the receipt of the option to tax from the taxpayer.

UK Certificate of Status

On 1 May 2022, HMRC updated its guidance on requesting a certificate of status to provide to overseas tax authorities. From 1 May 2022, HMRC will normally issue the certificate by email. 

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