May 2013

The decision in the National Exhibition Centre Limited (‘NEC’) case on the VAT treatment of booking fees has found in favour of the tax payer. This means that the NEC can treat its income from Booking fees as exempt from VAT.

The NEC decision hinged on whether the services supplied by the NEC qualified as exempt payment handling services. It was confirmed that the supply by NEC to its customers effected payment and therefore qualified for exemption. This is good news for travel agents who have been assessed by HM Revenue & Customs (‘HMRC’) following the Court of Appeal decision in Bookit Limited (where HMRC have argued that the activities of the travel agent did not affect payment and therefore failed to fall within the exemption). In our view the activities undertaken by travel agents are on all fours with those in the NEC case. In respect of this and the number of assessments raised in this area it is likely that the decision will be appealed by HMRC.

If NEC are ultimately successful this will mean that travel agents will have a competitive advantage over those accounting for VAT under the Tour Operators Margin Scheme. Unfortunately, such businesses will only enjoy the benefit of the exemption in the situation where the payment handling services are being supplied by a separate entity (i.e. the structure in place is akin to that in Bookit Limited/ NEC).

At The VAT Consultancy we have considerable experience of advising clients on the VAT treatment of these services and the options available to both travel agents and tour operators. Therefore, if you have any questions regarding the case or would like to discuss the issue further, please  contact Martyne Pearson on Martyne.pearson@thevatconsultancy.com or call on 01962 735 350.

Many EU businesses are grappling with the question of how they can reduce the cost of customs duty on imports of US origin jeans.  This follows the announcement that an ADDITIONAL rate of duty of 26% plus the existing 12% (for jeans) will apply as a result of EU retaliatory action in relation to the Byrd Agreement. Basically the EU is able to protect EU businesses by imposing such duties to counteract perceived illegal subsidies given to US businesses.  This is effective from 1 May 2013 and also affects the following goods:

–          Sweetcorn (uncooked or cooked by steaming, boiling in water, frozen)

–          Jeans

–          Crane lorries

–          Frames and mountings for spectacles or goggles, made from base metal

Depending on the supply chain and commercial set up, there is a range of customs duty reliefs available to businesses to mitigate this customs duty cost.  For example if the fabric originates in the EU, its value can be stripped out from the reimported value post manufacturing in certain circumstances.  Similarly where lengthy supply chains are in place it may be possible to use the First Sale for Export valuation structure.

For more information on this please contact Julie Park on +44 208 941 9200

From 1 April 2013 there have been changes to the UK APD legislation. One of the changes relates to the extension of APD to business jets and smaller aircraft of 5.7 tonnes and over.

This means that if you operate an aircraft with an authorised take-off weight of 5.7 tonnes or more, which takes off from a UK airport carrying chargeable passengers, you will be required to register for APD within seven days of the flight occurring, and account for APD.

Not only does this affect UK established business jet operators, the revised rules will capture non-established operators who take-off from UK airports. The change in rules will therefore create an additional compliance burden and cost for those operators not previously caught by the rules.

Unlike UK operators, non-established operators will either need to appoint a fiscal representative or an administrative representative in order to file APD returns in the UK.

The VAT Consultancy has extensive experience of advising on APD issues and is also able to provide support to overseas operators who are looking to appoint an administrative representative. If you would like some further information regarding the implications of the changes then please do not hesitate to contact Martyne Pearson on 01962 735 350.

Our recent experience in trying to make a written submission via e mail to the Written Enquiry Team at Southend demonstrates how difficult it can be sometimes to get your message through.

Firstly, we discovered that the advertised e mail address, Enquiries.estn@hmrc.gsi.gov.uk is no longer a recognised address.

Searching for the new system, we discovered it’s now online at the HMRC website (as below) and you need to submit an online form with your enquiry.  It’s definitely HMRC’s preferred route as it says below.  That’s okay, but your submission has to be less than 2,000 characters and you can’t send an attachment.  Not very useful when you are submitting something like a request for a Partial Exemption Special Method, which requires a number of specific paragraphs which HMRC stipulate.

So be aware, you need to be brief these days, or resort to posting your request.

For general VAT enquiries

Where possible HMRC strongly recommends that you submit your questions about VAT by secure email using one of the links below rather than by post. HMRC can reply to your enquiry more quickly this way. Only particularly long questions or those with attachments should be sent by post.

Email HMRC for your Effective Date of Registration (EDR)

UK VAT-registered business – email a VAT question

Business not registered for VAT in the UK – email a VAT question

Members of the public – email a VAT question

Agent with a UK VAT-registered client – email a question

Agent with a client who is not registered for VAT in the UK – email a question

If you need to write to HMRC by post, please use the following address:

HM Revenue & Customs
VAT Written Enquiries Team
Alexander House
Victoria Avenue
Southend
Essex
SS99 1BD