I have a wide range of issues to solve due to a broad client base. Over the last year, there has been an increase in two areas: land and property transactions, and international trade.
We have of course been advising on Brexit issues. Our advice has been largely around selling goods into the EU and the compliance and customs clearance issues, the latter being the Union Customs Code’s requirement for an import/export declarant to be established in the EU. We have also advised EU suppliers on similar issues for UK trade.
We’ve also advised US and other non-UK/EU entities. They too have needed to get to grips with changes to their European structure. This has partly been due to the UK/EU border as well as changes in the rules for lower value imports. From 1 January, the UK introduced a VAT registration requirement for imports under £135. The EU followed suit in July (€150). The EU also replaced its distance selling regime for intra-EU B2C supplies of goods. MOSS, used previously for capturing on one return the VAT due per country on B2C e-services, morphed into the one-stop shop, adding trade in B2C goods to its capability. These changes have been well reported and it is unsurprising that we have had much to do on these issues.
What trends are you seeing in practice?
What has been slightly surprising is the number of non-Brexit related issues. For example, we have seen entities failing to appreciate that they are incurring and not reclaiming considerable sums of import VAT. We have also seen instances where businesses have offered B2C downloadable content or streaming services and have a historic registration obligation. The rules in this regard have been similar since 2003 and were updated by MOSS in 2015, but the EU-wide single VAT return filing facility is not available retrospectively and so individual country registrations are required.
Another area that is taking up a lot of time is having to chase HMRC for a very slow response time to our letters or in processing compliance related applications, such as for VAT group registrations. We appreciate that HMRC accepts a VAT group from date of the application, but does it appreciate the practical implications of it taking six months to actually process them?
Has there been an interesting problem you’ve encountered recently?
We’ve had a particular issue persuading HMRC of zero-rating for an ice-tea beverage. The product primarily consisted of brewed tea with additional sweeteners and fruit flavourings. Under VATA 1994 Sch 8 Group 1, beverages are ordinarily exceptions to the relief and are standard rated, although under item 4 ‘tea’ is zero rated. The question was whether an ice-tea beverage would qualify as ‘tea’. HMRC indicated that it wouldn’t as it was ‘more akin to a soft drink’ and so standard rated. However, ‘soft drink’ is not a term which appears in the VAT legislation, and we successfully demonstrated that the product should qualify for zero-rating as it was fundamentally tea. As well as focusing on the nature of the product, we considered how the product was marketed to consumers and their perception and usage of the product. These are key factors the courts frequently consider in determining the VAT liability of consumable products.
What should we look out for next year?
The EU’s continued VAT reforms under its tax package. Further implementation over the next few years will undoubtedly have an impact on businesses and require changes.
You might not know this about me but...
I got into VAT with Customs & Excise, as was, without ever applying for the job. Being a uniformed officer at a port or perhaps in an excise warehouse was the appeal for me, but little did I know. A question at the end of my interview as to what I knew about VAT – to which the answer was ‘not a lot’ – was clearly enough to allow the panel to see that a life of VAT was meant for me. Thank you to those three wise men!
I have a wide range of issues to solve due to a broad client base. Over the last year, there has been an increase in two areas: land and property transactions, and international trade.
We have of course been advising on Brexit issues. Our advice has been largely around selling goods into the EU and the compliance and customs clearance issues, the latter being the Union Customs Code’s requirement for an import/export declarant to be established in the EU. We have also advised EU suppliers on similar issues for UK trade.
We’ve also advised US and other non-UK/EU entities. They too have needed to get to grips with changes to their European structure. This has partly been due to the UK/EU border as well as changes in the rules for lower value imports. From 1 January, the UK introduced a VAT registration requirement for imports under £135. The EU followed suit in July (€150). The EU also replaced its distance selling regime for intra-EU B2C supplies of goods. MOSS, used previously for capturing on one return the VAT due per country on B2C e-services, morphed into the one-stop shop, adding trade in B2C goods to its capability. These changes have been well reported and it is unsurprising that we have had much to do on these issues.
What trends are you seeing in practice?
What has been slightly surprising is the number of non-Brexit related issues. For example, we have seen entities failing to appreciate that they are incurring and not reclaiming considerable sums of import VAT. We have also seen instances where businesses have offered B2C downloadable content or streaming services and have a historic registration obligation. The rules in this regard have been similar since 2003 and were updated by MOSS in 2015, but the EU-wide single VAT return filing facility is not available retrospectively and so individual country registrations are required.
Another area that is taking up a lot of time is having to chase HMRC for a very slow response time to our letters or in processing compliance related applications, such as for VAT group registrations. We appreciate that HMRC accepts a VAT group from date of the application, but does it appreciate the practical implications of it taking six months to actually process them?
Has there been an interesting problem you’ve encountered recently?
We’ve had a particular issue persuading HMRC of zero-rating for an ice-tea beverage. The product primarily consisted of brewed tea with additional sweeteners and fruit flavourings. Under VATA 1994 Sch 8 Group 1, beverages are ordinarily exceptions to the relief and are standard rated, although under item 4 ‘tea’ is zero rated. The question was whether an ice-tea beverage would qualify as ‘tea’. HMRC indicated that it wouldn’t as it was ‘more akin to a soft drink’ and so standard rated. However, ‘soft drink’ is not a term which appears in the VAT legislation, and we successfully demonstrated that the product should qualify for zero-rating as it was fundamentally tea. As well as focusing on the nature of the product, we considered how the product was marketed to consumers and their perception and usage of the product. These are key factors the courts frequently consider in determining the VAT liability of consumable products.
What should we look out for next year?
The EU’s continued VAT reforms under its tax package. Further implementation over the next few years will undoubtedly have an impact on businesses and require changes.
You might not know this about me but...
I got into VAT with Customs & Excise, as was, without ever applying for the job. Being a uniformed officer at a port or perhaps in an excise warehouse was the appeal for me, but little did I know. A question at the end of my interview as to what I knew about VAT – to which the answer was ‘not a lot’ – was clearly enough to allow the panel to see that a life of VAT was meant for me. Thank you to those three wise men!
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