Nichola Ross Martin's Tax Consultancy

A periodic VAT update also listing measures announced in Budget 2012.

VAT: Hot Food & Premises (pasty tax)

From October 2012 certain food which is sold hot will be treated for VAT in the same way as take-away food.

• Take-away food is deemed to be food supplied “in the course of catering”.
• The change means that it will attract VAT at 20% instead of being zero rated.

What foods will be affected?

This measure will apply to food retailers selling freshly baked or heated products that are sold to customers for eating on or off their premises.

The term premises will include areas adjacent to the retailer and shared with other retailers.

What’s the fuss?

There has been an uproar in the press about this because it sounds silly.

The measure was announced by the Chancellor in his March 2012 Budget. It may prove unworkable. VAT will be imposed on items such as pies, pasties and bread baked in bakeries and supermarkets if they are supplied hot and so the cost of these items will increase for some consumers. However, there will be no extra VAT if the food is served cold. The retailer will measure the heat of the product at the point of sale by confirming whether or not it is above the ambient air temperature.

Many shops already sell cold food, but with they provide a microwave allowing a customer to heat up a product such as a pasty for no extra charge.

VAT registration and deregistration thresholds

Registration threshold

If taxable turnover for VAT purposes in the previous 12 months exceeds the threshold.

Or,

VAT registration is compulsory if either of the following applies:

• VAT taxable turnover may go over the threshold in the next 30 days alone.
• When a VAT-registered business is taken over as a going concern.

Deregistration threshold

If VAT taxable turnover for the year is less than or equal to the deregistration theshold or it is expected to fall below it in the next 12 months, a business has the option of deregistering - if it wants to.

Intra-EU supplies from Germany – new German tax authority evidential requirements

Since 1 January 2012, the German Ministry of Finance has required German suppliers to hold a “Gelangensbestätigung”, i.e. a confirmation signed by the recipient that the goods arrived in the country of destination, in addition to a copy of the invoice relating to the intra-EU supply, as evidence of the intra-EU transaction. 

Depending on how the transport is arranged, the content of the Gelangensbestätigung differs, but it always needs to state when and where the goods were actually received by the purchaser.

The new requirement is subject to a transitional period lasting until 31 March. Increasingly, German suppliers will be asking their customers in all Member States to complete the relevant form in relation to their purchases.

If you have any clients who buy goods from Germany they will have to be asked to comply with these new rules.

VAT: costs sharing exemption 

The exemption is mandatory by virtue of the Principal VAT Directive (PVD), Article 132(1) (f) and its predecessor, the Sixth Directive, but has never been introduced into UK VAT legislation. It is intended that it will be in 2012.

• This exempts the cost sharing of services from VAT.
• The exemption is intended to be used by organisations such as charities, universities and higher education colleges, housing associations wanting to make efficiency savings by working together to achieve economies of scale.
• Introduction in the UK follows consultation and will be included in the draft Finance Bill 2012.

Repayment claims

May be able to go back for a period of up to 4 years and submit a claim for any VAT that may have been overpaid plus interest on those amounts.

Qualifying conditions

The following conditions apply:

• The cost sharing group must be independent.
• Members of a cost sharing group must make exempt and/or non-taxable supplies.
• Supplies by the cost sharing group to its members must be at cost.
• The services supplied by the group to its members must be ‘directly necessary’ for the members’ exempt and/or non-taxable supplies.
• Cost sharing, using the exemption, must not cause a distortion of competition.

For VAT technical support call: 0844 770 1865