I can’t believe we’re now into the second week of September. I spent most of last week stuck to my laptop working on the new content for the website, which I’m hoping to upload and relaunch within the next week or so. Then I can get out and concentrate on the proper work.
And in the meantime, the nights and mornings are closing in and those of you with children will be relieved as they get back to school and we can all get back to a normal routine.
We’ve a decent spell of weather promised for later this week but there are more signs that we are moving into autumn. The summer plants are dying and I’ve got a load of winter flowering plants to put in pots and baskets on my balcony. That is if the wind dies down enough for them to take root! Last year I didn’t have any winter plants and the balcony looked so bare that I’ve made sure I’ve got plenty of things to flower during the winter months and early spring this time round.
Getting back into the swing of things with partial exemption!
Another sign of getting back into the routine was the issue of a new Revenue & Customs Brief, 57/09, about the VAT partial exemption “payback” rules following the decision of the High Court in the Community Housing Association case. There haven’t been many cases about the “payback” or “clawback” rules despite the fact that they’ve been around for a while. They apply when the taxpayer purchases goods or services for either taxable or exempt or a mixture of supplies but uses them for something different. Not to be confused with the “Capital Goods Scheme” which applies in different circumstances.
In this case, the CHA incurred VAT on costs that it intended to use for it’s main partially exempt activity and didn’t recover the VAT as it was exempt input tax. It then sold the goods, as a taxable supply, to an associated company. As the “use” of the goods changed from the original exempt intention to a taxable supply, the CHA made a “payback” claim for the VAT paid on the purchase.
HMRC challenged the claim on the basis that the transaction was not a genuine commercial transaction as it involved connected parties and that it was done purely to enable the CHA recover the VAT, the principles laid out by the ECJ in the Halifax ECJ.
The High Court ruled in favour of the CHA, accepting that the transaction was genuine and allowing the CHA claim. HMRC have accepted the decision in this case but I think it’s important to remember that this is just another example of how HMRC will challenge any transaction which it believes is done to “avoid” VAT. There was a query on the forum last week where the visitor asked if there were “legal ways” to avoid incurring VAT on certain costs. Well the simple point is that it is often possible to come up with “legal ways” which fall within the letter of the VAT law to minimise VAT costs, but HMRC believe to be “avoidance” within the guidance following Halifax. And of course now in many cases, you can go ahead with the transactions but you are required to notify HMRC under the new disclosure rules and they will simply come along and issue an assessment for the VAT that they believe has been avoided.
Anyway it’s a good reminder of why there really aren’t many “legal ways” to avoid VAT, especially where property is concerned. And also one of those subjects that sort of makes me feel as though we’re really getting back into the swing of things.
And the raspberries!
Finally I’ve had my first bowlful of raspberries grown on my balcony this past week and they were delicious! Not exactly enough to feed an army but I’ve got another good few bowlfuls ripening on the canes and I’m pretty pleased with the results for this first year! I’ve invested in another set of plants and a blackberry bush and I’m hoping that I’ll have raspberries from early summer next year (the variety I have has 2 croppings, one in June/July, the next in early autumn) and a decent crop of blackberries to accompany them.
Anyway hope you’re all getting back into the swing of things and having a good start to the term.
Marie