June Newsletter 2021

Bevan VAT Newsletter

Changes to sales of goods to the EU from 1 July

With effect from 1 July 2021, the VAT treatment will change for goods imported into the EU and Northern Ireland where the consignment value is below €150. From that date, the seller will be required to charge and account for VAT based on the country in which the customer belongs. That means that VAT will be chargeable at 21% for sales to Belgium, 25% for sales to Denmark, 20% for sales to France, and so on.

To save a business having to register in each EU state to which they make sales, there will be a new opt-in Import One Stop Shop (IOSS) which will allow monthly reporting and payment of the VAT. This will usually need to be done via an EU intermediary and I am currently working on being able to offer this service.

For sales made via online market places (OMPs), the VAT and IOSS return will usually be dealt with by the OMP.

Read the latest guidance

Installation of Blinds in New Builds

Relief is generally available for building materials incorporated into a new build dwelling, either by way of zero rating by the developer, or by a DIY claim in cases of a self build. The relief covers items such as timber, bricks, glass, kitchen units, baths, sinks, etc.

Certain goods have been specifically blocked from relief such as fitted furniture and carpets.
Up until now, that block also covered blinds.

The First Tier Tribunal has now found that manual window blinds and shutters do qualify as building materials and should therefore qualify for the VAT relief. The changes do not apply to curtains or to motorised blinds or shutters.

The policy change applies with effect from 5 October 2020 and businesses which have not recovered VAT, but should have, will be entitled to make an error correction claim.

Revenue & Customs Brief 5 (2021)

Juice Cleanse Programmes

Under VAT law, the majority of food is zero rated but there are some exceptions, such as beverages, which are standard rated.

Whilst most drinks are beverages, some drinkable liquids (for example some liquid foods) are not beverages and are zero-rated for VAT purposes. The Core operates a juice bar which offers juice cleanse programmes comprising fresh drinks made by juicing raw fruits and vegetables. The programme is based on the consumption of 4 × 500 millilitre bottles of juices and smoothies per day and is run over a number of days – for example, a customer might undertake a 5-day juice cleanse programmes whereby meals are replaced by 4 juice cleanse programme juices and smoothies each day. The Tribunals considered this and concluded that these drinks were meal replacements rather than beverages and should be zero rated. HMRC has published a brief suggesting that questions to be considered when establishing the liability of this type of liquid should include:

  • how the drink is held out for sale – for example how it is labelled, packaged, displayed, invoiced, advertised and marketed
  • circumstances of consumption – for example why it is consumed and when it is consumed
  • taste and texture
  • ingredients
  • manufacturing process

Revenue & Customs Brief 6 (2021)

Electric Vehicle Charging Points

As electric cars become more common, HMRC has been approached by many interested parties to provide guidance on the VAT treatment of electric vehicle charging points.

HMRC’s view is that supplies of electric vehicle charging through charging points in public places should be charged at the standard rate of VAT. There is no exemption or relief that reduces the rate of VAT charged. The brief also covers examples of how to establish how much of the VAT incurred is recoverable when the vehicle is charged for business purposes.

Revenue & Customs Brief 7 (2021)

Fuel Scale Charges

HMRC has published the list of fuel scale charges which apply for periods beginning on or after 1 May 2021.

See the table

Call for Evidence: VAT Land Exemption

HMRC has released a consultation in connection with the VAT treatment of land & buildings. This is in response to the 2017 report by the Office for Tax Simplification which highlighted the complexities in the VAT treatment of land and property.

When the legislation was originally written, supplies of land & property were exempt from VAT apart from 4 exceptions. Over time, the rules have changed and there are now 15 exceptions and 26 sets of notes!

HMRC acknowledges that businesses can spend a disproportionate amount of time and money to establish the correct liability of a property transaction.

The questions on the existing rules are:
  • What is your experience of the VAT rules on land and property?
  • Are there any supplies that are particularly difficult to establish the correct liability for, leading to financial and administrative burdens? Please explain.
  • Do you think that the land and property VAT rules require simplification? Please explain why.

Some suggestions to simplify the rules are:
  • Removing the ability to opt to tax and making all relevant transactions exempt
  • Removing the option to tax and making all land and property taxable at a reduced rate
  • Making all commercial land & property taxable at the standard rate with an option to exempt
  • Defining shot term or minor interests as subject to VAT
  • Making most supplies subject to VTA by default and exempting specific supplies
  • Linking VAT liability to the Land Registry
There are more detailed summaries of the above suggestions within the consultation document. HMRC would like to know taxpayers’ views on the above options and any suggestions they have for other ways to simplify the rules.
Responses are required by 3 August 2021.

The VAT Practitioners’ Group is putting together a response to the consultation so, if you have any suggestions or comments, please let me know and I will feed it back to those preparing the response.

Read the call for evidence

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