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Indirect Tax Update for week ending 5 December 2014
A fairly quiet week in the world of Indirect Tax despite it being the week of the Autumn Statement.
There were very few surprises in this year's Autumn Statement. The Chancellor confirmed that Hospices will, finally, be put on a more level playing field and will be entitled to reclaim input VAT incurred on non-business activities. This will be welcome news for all Hospices as VAT has, historically, been a significant overhead cost. This move will put Hospices on the same footing as NHS Trusts.
There was equally good news for search and rescue charities and air ambulance operators who will also be entitled to recover VAT on running costs. The finer detail of both schemes are yet to be finalised but both schemes are likely to be implemented from April 2015.
Talking of 2015 – it is now only just over three weeks to the new year and businesses supplying electronic / digital services to consumers located in other Member States should have already taken steps to either register under the MOSS scheme or to register for VAT in the Member States where they make such supplies.
Businesses should be aware that, from 1 January 2015, there will be a legal requirement to account for VAT on all B2C supplies of electronic / digital services in the country where the consumer customer belongs and, as there is no turnover threshold for these supplies, a single supply of only a modest value will mean that registration for VAT (either under the MOSS scheme or under the normal VAT registration rules) will be required. Affected businesses that have yet to register need to take urgent action.
Following recent campaigns (#VATMOSS), we are aware of a rumour that HMRC has announced that small businesses currently trading below the UK VAT registration threshold and which are not, therefore, VAT registered in the UK can now register for UK VAT so as to be able to register under the MOSS scheme. We understand that HMRC has stated that such businesses will not be required to account for any VAT on UK sales but will only be required to account for VAT on EU sales through the MOSS return.
Comment - We would stress that whilst this is a pragmatic and sensible solution for small businesses, the concession has not been confirmed by HMRC and small businesses should not therefore rely on it.
For further information in relation to any of the issues highlighted in this Indirect Tax Update please contact: Karen Robb [email protected] Stuart Brodie [email protected]
Andrea Sofield [email protected]
Richard Gilroy [email protected]
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Indirect Tax Update 45/2014
