VAT Frequently Asked Questions (FAQs)
Why should I seek professional advice, I already know the VAT rules?
Many businesses are already VAT knowledgeable and have a good understanding of the principles of VAT mitigation. They are not however “experts” in VAT law nor do they have ready access to tribunals, case studies and other factors which go beyond the information readily available in the public domain. Our full time, qualified taxation specialists are able to offer a higher level of expertise and a wider knowledge base through their work across the industry.
One of my suppliers has given me advice on VAT. Can I rely on this advice?
Your supplier may have provided you with advice in good faith and to the best of their knowledge. They may even have correspondence from HMRC (a clearance) backing up their advice. Such clearances however only cover the business to whom they were issued. It is essential that you obtain your own advice since your business alone is responsible for the correct treatment of VAT.
I phoned the National Advice Helpline and they gave me some advice. Is this advice binding on their part?
The helpline is there to assist with common VAT queries. The operators are working to a script to a large extent and it is not within their remit to deal with technically complex VAT matters. Such advice is unlikely to be binding on the part of HMRC. For peace of mind you should seek independent professional advice.
I wrote to HMRC’s Written Enquiries Section to seek clarification. Why didn’t they provide me with an answer?
HMRC should respond to all written enquiries, however, they are not obliged to give you an answer. If, in their view, the answer to your question is already covered in their published guidance, they will reject your request for further clarification or help. Instead they will refer you to the relevant guidance. This is not helpful but it is a reality. HMRC will only provide further clarification or a clearance when they can be persuaded that there is ‘material uncertainty’ about matter concerned.
Is HMRC always bound by any further clarification which they provide?
No. There are several circumstances when the further clarification or ruling will not be binding on HMRC. Most commonly this happens when they consider they did not receive all the relevant information or details. About this HMRC say that ‘…for information or advice you have received to be considered binding on HMRC, …you must set out all the relevant facts and draw attention to all the issues.’ Professional help will help you avoid this happening.
A competitor of mine is zero rating a supply which I understand is standard rated. How can this be?
There are a number of reasons why this anomaly might exist. Firstly, your competitor may be incorrect because they have misunderstood the rules or they may be simply breaking the rules in order to win the work. Or they may have obtained a clearance from HMRC and are perfectly legitimately zero rating the supply. There are many grey areas in VAT and much of the guidance is subjective. Two people could interpret the same issue differently.
I have a charity client who has told me they do not pay VAT on anything because of their charitable status. Is this correct?
There is no general relief from VAT for charities. Mostly a charity should be charged VAT like any organisation or business. However, there are defined concessions applying to charity advertising and certain printed matter used for appeals. Always check or take advice about this when dealing with a charity as there is also additional paperwork which you need to maintain when applying the concessions.
I am acting as a “single supplier” by getting other suppliers to route their invoices through me even though they haven’t done the work for me. Is there anything wrong with this for VAT purposes?
Anyone who knows anything about VAT will be aware that such artificial “invoice routing” schemes exist for one purpose only. To avoid VAT. HMRC could view this as an abusive practice and you could face severe penalties. “Single sourcing” is a legitimate VAT mitigation practice when done correctly.
HMRC appear to have recently changed the laws on single sourcing. Can they do this?
HMRC have recently (August 2014) publicly stated their policy on single sourcing of printed matter and associated supplies. There has been no formal change in the law. HMRC maintain they are just affirming a policy they have always held.
I understand there are different VAT rules governing supplies made to businesses outside the UK?
Yes. There are different VAT rules for overseas customers. A common mistake is to presume that the VAT liability is determined by where the work is done. There are some services to which this applies but mostly VAT is due according to the location and status of the customer and, when dealing with goods, to where the goods are delivered.
When I run the software why does it ask me for a serial number?
A serial number is required either because you are running a new installation or because the licence on your existing installation has expired.
I have entered a serial number but I still can’t run the software?
A serial number is required to register the product however this does not unlock it. During the install process you should have received instructions to apply for an unlock key via email.
My software won’t run because it says the licence has been tampered with?
Our software is licensed to a specific PC/location. It has anti-tamper measures which mean it can’t be copied to another PC or location.
Can I print off pages of the software?
No, the software has measures to prevent it being printed, copied, saved or otherwise distributed.
How do I renew my licence?
Simply send an email to firstname.lastname@example.org from the email address with which you registered the product.