CH T A R C S CH T I T A H T S W E N FOR T A V T U ABO
Indirect Tax Current Headlines JANUARY 2024
CHANGES TO DO-IT-YOURSELF’ BUILDERS’ REFUND CLAIMS SUBMITTED ON OR AFTER 5 DECEMBER 2023 HMRC has now updated its guidance: View Claim a VAT refund for a new home or charity building if you’re a DIY housebuilder View Claim a VAT refund for a conversion if you’re a DIY housebuilder View VAT refunds for conversions if you’re a DIY housebuilder View VAT refunds using the DIY housebuilder scheme View VAT refunds for new builds if you’re a DIY housebuilder View VAT refunds for constructing a new charity building
Online sale of contact lenses – standard rated v exempt
In a case involving Glasses Direct, an online retailer of glasses was able to show that its operation, except for the face to face contact and the overhead of actually having a high street premises, was essentially the same as a high street optician. Customers could either send in their old glasses, or try glasses at home, there was a fully staffed helpline, all with the aim of ensuring that the customer got the right glasses. It has a thoroughly documented quality control process, evidencing that all operations were carried out under qualified supervision. Glasses Direct’s dispensing services were confirmed as VAT exempt.
The Vision Direct group sells contact lenses online. Traditionally, opticians charge VAT on spectacles and contact lenses but dispensing services performed by (or performed under the supervision of) registered ophthalmic opticians or registered dispensing opticians, can be exempt.
These features were not present in VDL’s offering.
The Tax Tribunal has just found that the services provided by Vision Direct’s dispensing arm (“VDL”) are standardrated, not exempt. The background is that a customer buys contact lenses from a sister company, VDBV. VDL picks the goods in the warehouse and dispatches them to the customer. VDBV charges the customer for the lenses, and VDL charges the customer for its services. There is quite a lot of material provided on VDBV’s website which seeks to answer questions a customer might have about contact lenses. The Tribunal didn’t have to decide whether this was enough to constitute medical care. Crucially, the website is provided by VDBV, not VDL. On the facts, the tribunal decided that VDL provides no medical input into the process. It is simply fulfilling the customer’s order of readymade lenses, and unlike spectacles, there is no making up of lenses and frames to meet the customer’s requirements.
Nor does VDL validate the customer’s prescription, except in the rare case where the customer specifically asks for this. The “no need for prescription validation” feature of Vision Direct’s business model is promoted to customers as an advantage. In summary, Vision Direct’s drive for business efficiency meant that it lost the essential features entitling it to exempt the dispensing service. It is not enough that the rest of the Industry enjoys some relief from charging VAT.
HMRC letter campaign to target non-payers of VAT As mentioned as a “stop press” item with last month’s ITCH, HMRC have advised they will soon be starting a letter campaign targeted at businesses who HMRC think have not paid VAT or submitted returns. Another version of the letter is being sent to agents, asking them to identify clients with overdue VAT returns and work with them to submit those returns. We don’t know for certain whether HMRC will in fact be running a major exercise targeting those with multiple outstanding payments or returns. But given the state of the UK’s finances, it would be surprising if HMRC don’t do this. The letters themselves may also be aimed at cutting down the number of appeals if a taxpayer thinks a penalty is “unfair”HMRC can say “we warned you”. Among other things, HMRC’s promised “light touch” to late payment penalties only applied to 2023, so this period is coming to an end. Late filing penalties- these will probably start kicking in in 2024, just because that is when businesses will start accumulating enough points. HMRC also warn they will make an assessment for the VAT they estimate is due in the absence of the return. This is not a new development, but HMRC might start inflating the central assessments issued when a business doesn’t file a return. There is a penalty for not telling HMRC that such an assessment is too low, by the way, which I think we should be reminding clients about. We would be happy to assist any clients who receive such a letter.
Did you know? Want to know whether you paid VAT on the nuts you bought for Christmas snacking? Read on.
for sale as pet or wild bird food. What about fruit and nut mix? If the standard-rated element, sweetened fruit, roasted nuts or chocolate is less than 25% of the weight it may be treated as a single zero-rated supply. Otherwise, the product has to be treated as a mixed supply and apportioned based on value.
Edible nuts that are still in their shells are zero-rated, even if they are roasted or salted. A bonus for pistachio afficionados. Shelled nuts are standard-rated if salted or roasted, but remain zero-rated if toasted.
For the Bombay mix fans, even if the chick peas are roasted, they aren’t nuts so that element is zero-rated.
The above assumes the nuts are for human consumption, rather than held out
STOP PRESS I’ve put an article on our website regarding the latest development in the Uber VAT case. It invites private hire firms to talk to us if these are using self-employed subbies, and are accounting for VAT on the full amount the customer pays. A similar issue may affect holiday letting businesses which buy in the accommodation from third parties and re-let. I hope to put a fuller piece in a later edition of ITCH, but please do not hesitate to let us know if you have clients that may be affected by this.
Steve Chamberlain VAT Senior Manager steve.chamberlain@albertgoodman.co.uk
01823 286096 www.albertgoodman.co.uk
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