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Shadow

Correction of errors

With effect from your first VAT return on or after
1 July 2008 the limit for correcting errors on your VAT return (without separate disclosure to HMRC) has been raised to the greater of:

  • £10,000 or
  • 1% of turnover (taking the turnover of the accounting period in which the disclosure is made), subject to an upper limit of £50,000.

These new limits of disclosure should be read in conjunction with the new penalty regime which will be introduced as early as 1 January 2009.

Interest chargeable on voluntary disclosures!

In addition to the new penalty regime, a recent House of Lords decisions means it is vital taxpayers to regularly review their VAT position. HMRCs policy of automatically not charging interest, where assessments are actually raised for net errors under £2,000, was deemed to be illegal. No doubt HMRC will take this decision on board, which is even more reason to ensure your VAT position is regularly examined.

August 2008

Condé Nast reminder

This case has been laboured on in previous advices but it is still worth noting that if clients have not done anything about it yet there is still time to see if there are any opportunities to recover lost VAT prior to 1996.

The last day for claims is 30 March 2009 and areas that might generate potential recoveries include:

  • VAT not recovered on fundraising costs
  • VAT not recovered on investment management services
  • VAT overpaid on membership subscriptions
  • A reworking of business/non-business apportionment of overhead VAT.

HMRC are looking to resist claims wherever they can to protect the revenue so charities should start asking the right questions now to avoid potential disappointment in the future.

June 2008

Football club is like a village hall

An interesting tribunal case in Scotland has held that Jeanfields Swifts football club was a charity and the construction of a football pavilion qualified as a village hall or similar and they could therefore get zero rating on construction costs.

The club was held to be run for purposes beneficial to the community in line with the new approach to defining charities being organisation which provide public benefit. Its activities were seen as more than just providing opportunities for footballers but extended to other activities where the community could use the facilities.

The pavilion was accepted as a useful and worthy facility designed not for trading but for the benefit of the local community in a deprived area of Perth where it was virtually the only community facility around. It therefore qualified as a village hall or similar.

June 2008