VAT advisors are often teased with comments along the lines of: “Your job must be easy – VAT’s just 20% on everything isn’t it?”
In fact, dealing with complex liability issues and working with HMRC to resolve disputes in this area is a key part of the services RW VAT offers to clients.
We recently settled a dispute case with HMRC where a client had incorrectly been charging VAT on a service which was properly exempt. Dealing with the retrospective issues arising from this was complex and extremely time-consuming but well worth the effort in the end as our client received a substantial net refund.
We have numerous other liability cases under consideration at present. These concern areas as diverse as:
-the zero-rate for books and printed matter
-the exempt status of certain services in the healthcare sector
-the zero-rate for buildings converted from commercial to residential use
-the exemptions for financial and insurance-related services
-the reduced rate reliefs for certain residential conversions
-the various VAT reliefs available for supplies made by and to charities.
There are innumerable ‘grey areas’ around liability issues and we would always recommend reviewing your business’s income streams on a regular basis to make sure you are applying the correct VAT rate. We also strongly recommend checking out the VAT status of any new products or services you plan to introduce.
Where supplies are exempt, remember that this also has a knock-on effect on the amount of VAT you can claim on purchases which can have a significant impact on your margin.