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4th January 2016 at 11:36 pm #584
Now that most of us are back at our desks, I thought it was a good time to review a few topical issues from 2015. These include PPFs and international management charges, but I want to start with a subject that affects anyone who plays golf, tennis or any other sport at a members’ club.
EU VAT: UK members’ sports clubs and VAT refunds
Have you ever tried to claim overpaid VAT from HMRC? Many businesses who have paid too much VAT don’t bother to make claims because of the time and hassle involved. One of the main problems is that businesses can only claim VAT if they undertake to refund overcharged VAT to their customers and this is often not possible, especially if your customers are private individuals.
Recently, the European Court of Justice (“ECJ”) ruled that charges made by members’ sports clubs to non-members to play sports- for example golf club green fees – are VAT exempt. Before this, UK law said that these charges were liable to VAT.
This means that most members’ sports clubs have overpaid VAT to HMRC, but can’t claim the overpaid VAT if they don’t refund it to the guest players. This could be very difficult to organise in practice, especially for smaller clubs that don’t retain guests’ names and addresses.
The other implication of this change is that the exempt VAT liability will probably reduce the amount of VAT clubs can claim on expenditure; for example, many clubs will have to repay some VAT previously claimed.
After reviewing the issue, HMRC has confirmed that it will make refunds of either 33% or 50% of the over-declared VAT depending on whether the fees are over £100 or less. See HMRC’s recent Brief 19/15 (Nov 2015) http://tinyurl.com/oghm4e8 for further details. These claims are subject to the normal 4 year time limit so make sure you submit claims as soon as possible, even if you’re only able to recover part of the overpaid VAT.
This is a really complicated issue and I’m very interested to hear about the progress, success or otherwise of any claims or any problems you may be having, so please leave a comment below.
Personal pension funds
I’ve been helping a number of people with property transactions for their personal pension funds. Looking at property from this perspective is interesting because many PPF owners are business owners or directors in large businesses, so they often have a pretty good working knowledge about VAT.
But if you’re planning to invest in property, you may be dealing with complex VAT and property rules for the first time. If you’re planning to invest in property to provide your pension, consider the VAT issues at the planning stage, preferably before you even start looking for suitable properties. Otherwise, you could end up paying VAT that could have been avoided if you’d planned in advance.
There’s a lot of information about VAT on property on my website https://vatexchange.co.uk. If you type “VAT and property” into the search box, it will bring you to http://tinyurl.com/jbcjm5d which includes blogs, articles and other information about VAT and property and my ebook: VATWoman’s Guide to VAT and residential property development for more information.
Cross border management charges
Another EU VAT issue affects the VAT liability of certain cross-border transactions between associated businesses who are registered in VAT group registrations.
Normally, transactions between members of VAT group registrations aren’t liable to VAT; however a number of EU countries have confirmed that that VAT must now be paid on such transactions in certain situations. These countries include Belgium, Denmark and Sweden. R&C Brief 23/15 explains the changes in more detail.
The UK VAT liability of such charges hasn’t changed, so most transactions between members of the same UK VAT group remain VAT free. However you need to be aware of the changes in case you or your clients are involved with such transactions with associated business in any of the countries concerned.
N.B The VAT liability of cross-border charges is based on the place of supply rules http://tinyurl.com/6yrtbqb, which establish the country in which the VAT should be paid.
Brit in space!
When I wrote this newsletter, I was watching the news about Tim Peake’s arrival on the ISS. It’s fantastic to have a British astronaut in space wearing the Union Flag and I hope he has an amazing time during his 6 month long stay.
That was a fantastic end to 2015 and I hope that you all have a very healthy, happy and prosperous 2016!
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