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25th March 2021

Partner Insight: Tax Day – Consultations – the VAT ones

Tax Day – the day when HMG will be setting out its tax policies and consultations following announcements made in the Budget earlier in the month. On that basis you might expect the announcement of a whole range of new policies and new consultations but, as often seems to be the case nowadays, the report released by the Treasury is made up of a lot of previously announced measures and calls for evidence and is only partly comprised of novel material.

Should any reader have an interest – go on you know you want to – in a catch up on yesterday’s Tax Consultation papers then a link to the HMRC Tracker can be found here.

Our Environmental Tax expert Mike has already picked out his particular favourites and you can find his comments here.

From the VAT perspective then there are a few obvious ones to pick out – that have the word “VAT” in the title for a start – but one or two of the others caught our eye as well.

As Mike’s already inferred from the environmental tax side, there was little of major change on the VAT side either. Some of these documents continue the conversation that began with the Office of Tax Simplification Review and for those hoping for an increase in the Partial Exemption de minimis levels or a major hike on the Capital Goods Scheme threshold you will be disappointed.

Of wider interest and as a backdrop to the direction of travel in tax administration more widely, we’d highlight the papers on:

  • Notification of uncertain tax treatment by large business
  • Promoters of Tax avoidance
  • Tax Administration Framework
  • Compulsory Professional Indemnity (PI) Insurance for Tax Advisers

To be honest we’d assumed that PI cover was the usual practice for any adviser – it’s a protection we’ve always had in place here at Centurion but clearly there as some “advisers” operating without such cover so I would see this as a step in the right direction for clients.

Whilst these documents are still in consultation in respect of the first one – the “uncertain tax treatment” point – they already appear to be having an effect in the way that some large business approach what would have been innocuous VAT steps.

An example we’ve seen was a large corporate disposing of a commercial building to an educational institution that was unprepared to accept their disapplication of the option to tax on a part of the value of the supply. The purchaser was left with having to approach HMRC on the matter to obtain written clearance – a challenge at any time in terms of getting comment on what we saw as a matter which exposed the vendor to little or no risk but an illustration of the concern that large organisations are having about creating any potential exposure to question by HMRC going forward.

The Tax Administration Framework paper also points to the digital direction of travel over the next 10 years across a range of taxes with Making VAT Digital leading the way it has to be said. “Real Time” tax reporting and administration feels only a matter of time away in the UK and other tax administrations across the globe are head in this aspect so we’re sure HMRC and the Treasury will look with interest at their systems and successes.

In terms of what to highlight then on the VAT front please click here. If you’ve any contribution to make to the discussions then HMRC will welcome input whether independently or through your trade, sector or business network. More general comments on past consultations to note include:

VAT grouping establishment, eligibility, and registration: expect a summary of responses in the summer.

VAT and value shifting: a summary of responses will be published in the summer.

VAT and public sector refunds: this could be a major VAT shift in recovery rules, so we hope to see more news in the summer.

As ever if you’ve issues on the VAT or Environmental Tax side than need practical support now then get in touch with us here at Centurion – emailus@centurionvat.com

For the avoidance of doubt, the content recorded in this news article does not constitute formal advice and we do not guarantee the accuracy of any information provided at the time of reading. It is always recommended that you seek professional advice before acting on any of the news articles or information included.

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