Cultural Bodies lose out following High Court judgment?
In a decision that will come as a blow to many cultural organisations, the High Court has ruled that Bournemouth Symphony Opera’s admission income is subject to VAT. The High Court agreed with Customs that the fact that, like many similar charitable organisations, BSO had a paid Managing Director who was a member of the Board meant that it was not managed on an ‘essentially voluntary’ basis.
Retailers - Cross border sales of services: new VAT rules on the way?
Businesses that sell services to private consumers in other EU countries may be facing increased compliance burdens under a proposal from the EU Commission to change the way in which such sales are taxed. Currently VAT is accounted for at the rate of the EU country in which the business is established in relation to almost all sales of this type. However, the proposal suggests changing the rules so that VAT is applied at the rate of the country in which the customer is established. Even if the proposal is combined with the "one stop shop", allowing businesses to deal with their cross border compliance through an electronic portal in their home country, businesses will still have to charge and pay the VAT rate applicable in their customer’s home country and will face increased compliance burdens as a result.
Retailers – low value imports
The National Audit Office has announced it may investigate the amount of VAT being lost because businesses use mail order arrangements to make VAT-free sales to UK customers. The scheme, based on EU law, allows goods to be imported from countries such as Jersey without VAT as long as they are imported individually and are valued at less than £18. In recent weeks the scheme has attracted critical press coverage; with the Jersey government recently announcing that applications for new licences by UK retailers seeking to use the arrangement will be refused.
Property - school conversion VAT refund
A Derbyshire man, who converted a former boarding school into a stately home, has won a 6 year battle to reclaim VAT paid on the conversion works. The VAT rules allow private individuals to reclaim VAT where a building used for non-residential purposes is converted to one that is used for residential purposes. However, Customs had contended that the entire claim should be disallowed as part of the boarding school had previously been used for residential purposes. The Court of Appeal agreed with the VAT tribunal and ruled that the individual was entitled to a refund of more than £300,000.
Finance Act
The Finance Bill (now the Finance (No2) Act 2005) received Royal Assent on 20 July.
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