HMRC have launched a new online service for VAT registered businesses to apply for a Partial Exemption Special Method (PESM). This is accompanied by an updated checklist of information that should be provided with applications.
VAT Cases & News
Summaries of interesting VAT cases for the SME owner.
HMRC have published Revenue & Customs Brief 11 (2021): ‘VAT liability of Coronavirus (COVID-19) testing services’, which explains the VAT treatment of COVID-19 tests.
In KSM Henryk Zeman SP Z.o.o. v HMRC [2021] UKUT 0182 a Polish company was caught out by a badly worded VAT registration form and HMRC rejected its registration. It should, in fact, have been registered and HMRC later raised a VAT assessment. Did it have a legitimate expectation to expect fairness?
In Claims Advisory Group Limited v HMRC [2021] UKUT 0199, the Upper Tribunal (UT) confirmed that claiming Payment Protection Insurance (PPI) compensation on behalf of individuals was not a VAT exempt supply of insurance services.
In Brough East Yorkshire Limited v HMRC [2021] TC08213, a Chinese takeaway successfully appealed a £34k VAT assessment. HMRC's one-night invigilation of the food outlet failed to note suppression of cash and the methodology in making the assessments was flawed by poor sampling and failure to adjust for price changes.
In Awards Drinks Limited (in liquidation) v HMRC [2021] EWCA Civ 1235, an appeal against a VAT best judgement failed due to a lack of credible evidence from the company and its director. Although HMRC suspected that the company was involved in tax fraud and money laundering, this did not displace the fact that the burden of proof lay on the company to explain its income.
HM Treasury has published a summary of responses to their call for evidence ‘VAT and the Sharing Economy’ which opened in December 2020.