VAT and pension schemes
HMRC has announced that the withdrawal of the "70/30" split on VAT charged by the managers of funded pension schemes has been postponed while consultations take place. Under the "70/30" split, 30% of the VAT on such services can be treated as the input tax of the company providing the pension. We expect that the consultation will be completed by 1 January 2006 and will be followed by an HMRC announcement.
Subsidies in France and Spain
The ECJ has ruled that the tax authorities in France and Spain were wrong in preventing businesses from recovering VAT on certain purchases where part or all of the cost of those purchases was met by a subsidy. Businesses with operations in France and Spain should now consider whether they have a claim for underclaimed input VAT in those countries.
VAT on charity fundraising
HMRC has now formally accepted the decision of the High Court in the case of Church of England Children’s Society. This means that charities may be able to recover some of the VAT on professional fundraising costs.
Housing Associations: Group purchasing arrangements
In the case of London and Quadron Housing Trust, a group of housing associations sought to save money by organising a group purchasing arrangement. Unfortunately, the particular structure adopted led to a VAT assessment of over £280,000 – the appeal against which has now been dismissed by the Tribunal
VAT on new houses?
Once again there appears to be some discussion about the possibility of levying VAT on the sale of new houses. In the past, the Treasury has considered applying a reduced VAT rate of 5% on new homes. It now seems that VAT on new houses may again be under consideration as a way of financing extra Government expenditure on infrastructure.
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