I have just responded to a query in Taxation magazine regarding someone who is using the Flat Rate Scheme.
The person in question is undertaking personal tax returns for UK and US individuals and has registered under accounting and bookkeeping services. Interestingly, they raise the question as to whether they should really be under 'other business services' which is a lower rate.
To help them decide what HMRC deem to be included within each of these headings they called the ever helpful VAT Helpline - only to be told it is a self-assessed tax!
Our answer to the query? It is simple when the under-used Flat Rate Ready Reckoner on HMRC's website is referred to. This helpful tool provides examples of which trades HMRC believe fit within these sector headings. Under 'Accountancy and Bookkeeping' they include 'income tax preparation services'. The case for a lower rate in this example is closed!
Do bear in mind however that accounting services to US individuals will be outside the scope and therefore not form part of the flat rate income....
Link to ready reckoner:
http://vatreadyreckoner.hmrc.gov.uk/HMC?cmd=sector&action=list&?rnd=76917384
Thursday, July 22, 2010
Friday, July 16, 2010
The new VAT issues facing the Public Sector
There are changing times ahead in the Public Sector, so I have taken the opportunity to sit down with Steve McIntyre our Public Sector Director to get his thoughts. Here's what he had to say:
Many of the public spending decisions and initiatives being announced by the Coalition Government are bound to have VAT implications. History shows us that VAT can have a major impact on Government plans, and strategies to deal with this had to be put in place.
For example; a concession was introduced to deal with problems on the zero-rating of wave 1 Acadamies, then further waves have been built using Local Authority peppercorn arrangements. Children's Centres also posed VAT recovery problems when the budget for them was first passed to Local Authorities.
I think that the following initiatives are likely to cause VAT headaches in the coming months;
State funded independent schools - like academies, these are likely to be charities or trusts and therefore will come within the restrictive charity VAT rules - zero-rating of capital projects only available to a new build or annexe. VAT registration may also be required if business activities are undertaken.
Cancellation of BSF - The Governments capital plans to replace BSF have yet to be announced, but there are indications that existing empty commercial/retail premises may be used to create "education space". Again, there could be VAT problems for the new independent schools and trust schools.
Further Out-Sourcing - I think that there could be a new phase of out-sourcing projects as severe cuts to Local Authority budgets materialise over the coming years. VAT savings can be made on certain services, such as Sport and Leisure moving into a trust, but other areas may incur additional VAT costs which need to be taken into account. Also, there can be some complex land and property transactions involved where VAT, again, becomes an issue.
As always with VAT I would always recommend the earlier these issues are discussed and addressed the better - VAT is a transaction tax and therefore it can often be too late to remedy things once a supply takes place.
Many of the public spending decisions and initiatives being announced by the Coalition Government are bound to have VAT implications. History shows us that VAT can have a major impact on Government plans, and strategies to deal with this had to be put in place.
For example; a concession was introduced to deal with problems on the zero-rating of wave 1 Acadamies, then further waves have been built using Local Authority peppercorn arrangements. Children's Centres also posed VAT recovery problems when the budget for them was first passed to Local Authorities.
I think that the following initiatives are likely to cause VAT headaches in the coming months;
State funded independent schools - like academies, these are likely to be charities or trusts and therefore will come within the restrictive charity VAT rules - zero-rating of capital projects only available to a new build or annexe. VAT registration may also be required if business activities are undertaken.
Cancellation of BSF - The Governments capital plans to replace BSF have yet to be announced, but there are indications that existing empty commercial/retail premises may be used to create "education space". Again, there could be VAT problems for the new independent schools and trust schools.
Further Out-Sourcing - I think that there could be a new phase of out-sourcing projects as severe cuts to Local Authority budgets materialise over the coming years. VAT savings can be made on certain services, such as Sport and Leisure moving into a trust, but other areas may incur additional VAT costs which need to be taken into account. Also, there can be some complex land and property transactions involved where VAT, again, becomes an issue.
As always with VAT I would always recommend the earlier these issues are discussed and addressed the better - VAT is a transaction tax and therefore it can often be too late to remedy things once a supply takes place.
Tuesday, July 6, 2010
Don't forget to file and pay your VAT online!
With first quarterly returns due to be filed online on 7 August 2010, HMRC are reminding businesses of the mandatory requirement to file and pay their VAT online.
Click here for more
Click here for more
Subscribe to:
Comments (Atom)
Posts
