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VAT Voice by Andrew Needham

Andrew Needham, Director of VAT Solutions (UK) Ltd, explains that the significance of HM Customs and Excise Business Briefs may be lost on some people, potentially including some VAT Officers!

Background

When the VATman changes his policy, either because he has reviewed existing policy and thinks it needs updating or when he wins or loses a court case, he notifies the world in general by issuing a Business Brief. This contains the background to the case, existing policy, the changes, and the resulting new policy. He normally issues 25-30 of these rivetingly interesting documents every year. They are available on the Customs Website and details are given in the VAT Notes that are sent with every VAT return.

In fairness, these are very useful documents and can keep business and advisors informed of important policy changes and quite often, the opportunity to claim some more money back when the VATman looses a case.

Problem

Its all fine and dandy when you read about changes in the VATmans’ policy and take advantage of them, but not when the VATman himself has never heard of the changes. Strange as it may seem the VATmans’ internal systems are so bad that the actual officers on the ground have never seen a Business Brief and have no idea what you are talking about when you quote from them.

To illustrate the point, when a business is about to start trading and has started to incur costs it can register for VAT before actual trading starts as what is known as an ‘intending trader’. About four years ago the VATman decided to impose extra conditions on property development businesses that had no basis in law. They started to insist that the company had to have actually purchased a property before they would register it for VAT so speculative builders and developers found it difficult to register for VAT prior to actually starting trading. In effect, their right to register as an intending trader had been removed. One company, Beaverbank Properties, took the VATman to Tribunal over this and won his case. As a result the VATman had to change his policy and accept other evidence showing and intention to make taxable supplies, or the making of an ‘option to tax’ commercial property was sufficient to register a property developer as an intending trader.

To take account of this decision the VATman issued Business Brief 14/04 setting out the new policy. A number of businesses took advantage of this change and applied for VAT registration only to be refused because they had not actually acquired the property yet, the old policy. One subscriber questioned the VATman in the Registration Unit at Wolverhampton who said, quote: ‘what’s a Business Brief, I’ve never heard of a Business Brief, I know of no change in policy’. The matter had to be referred to a senior officer and a copy of the Business Brief posted to them before they registered the company. Other subscribers are still having the same problem as nobody in the registration units seems to have heard of the change in policy that took place in June!

Tip

If you have made a change as a result of reading a Business Brief, or on the advice of your accountant based on the Business Brief, make a note of which Business Brief it was, and, better still keep a copy. If the VATman questions you, show him a copy of the Business Brief and send one to his superiors explaining that his staff do not know current Departmental policy!

Andrew Needham
Director, VAT Solutions (UK) Ltd
Email: andrewneedham@vatsolutions-uk.com


VAT Solutions (UK) Ltd
11 Winmarleigh Street,
Warrington,
WA1 1NB

(T) 01925 242497
(F) 01925 242498
(M) 07810 433927
(W) www.vatsolutions-uk.com

VAT Solutions (UK) Limited is an established independent firm of Chartered Tax Advisers, formed by Andrew Needham and Steve Allen. The company has a cross-section of clients from multi-national companies through to medium-sized and numerous smaller regional firms of accountants and solicitors. They produce a regular publication 'VAT Voice', which can be downloaded directly from the Internet via the following address: www.vatsolutions-uk.com/newsletter.doc