Hi there
This past week has felt very surreal and most of us are probably feeling somewhat unsettled by the result of the Referendum. So it’s quite a relief to get back to some more routine stuff in the June newsletter.
Of course leaving the EU does have implications for the UK VAT system, which I’ve discussed in my recent blog: https://vatexchange.co.uk/uncategorised/back-business-vat-usual/
In the meantime, back to some technical issues.
5% reduced rate on solar panels & other energy saving materials
HMRC planned to change the rules about the 5% rate for energy saving materials, including the supply and installation of solar panels, on 1 August this year. However the provisions aren’t in this year’s Finance Bill and HMRC has not yet confirmed when the changes will be implemented.
This is an interesting issue because the proposed changes were only to be introduced following a direction by the European Court of Justice. In the current circumstances, it’s not clear whether or when the changes will be made, so at this stage, it’s a wait and see situation. Either way, it’s very unlikely that the changes will be introduced on 1 August as planned, so make the most of those 5% alterations for the time being!
Holiday lets
People often assume that residential property lettings are VAT exempt, but that’s not always the case. If you advertise a property as suitable for holiday or leisure use, then your income from such lettings is liable to VAT.
Of course at this time of year, the price of lettings in Wimbledon and some other sports friendly places can be astronomical. If you’re only letting your own home for a few weeks each year, chances are that this income alone won’t be above the VAT registration limits. However even if you own a small number of holiday properties, the combined income of the rental income could easily reach the VAT registration limit (currently £83,000). Check out HMRC’s guidance in VAT Notice 709/3: Hotels and Holiday accommodation for more information http://tinyurl.com/znrxk2p, especially section 5.
Zero-rating mobile devices for visually impaired
The subject of VAT reliefs for goods and services for the disabled is very complicated and the subject of regular appeals to the VAT/Tax Tribunal. In a recent case, the Tribunal agreed that the zero-rate applies to the sale of certain mobile devices which have been fitted with software designed to enable the blind or partially sighted to use the devices.
The principles involved in this decision could extend to other products and there may even be opportunities to claim VAT overpaid on such products in the past. For more information, see the recent article on Accountancy World http://tinyurl.com/j5d37y3 and contact me if you’d like to discuss in more detail.
Final comment about UK VAT law
During the past few days, I’ve read comments from various people along the lines of “we can do what we like in terms of VAT now we’re leaving the EU”. Personally, I’d be very wary of this approach. If the UK wishes to remain part of the “Single Market”, this would almost certainly mean that we’d have to continue using the EU VAT system. In the meantime, I am sure that HMRC will continue to apply the existing VAT rules as long as this is a policy of the UK government, so make sure that you follow the current rules unless and until we’re told otherwise!
In the meantime, don’t hesitate to contact me if you need any help with VAT issues. And check out my ebook “VATWoman’s Guide to VAT and residential property development” which is now available on Amazon.co.uk http://tinyurl.com/zhlodtp
Marie
June 2016