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Beware exceptions
Key points
- The ‘use and enjoyment’ rules tax some services according to the country where they are consumed.
- The general business-to-consumer rule for services is that VAT is charged according to where the supplier is based but not for performance services.
- A business that temporarily exceeds the £85 000 annual sales threshold can ask HMRC for an exception to being registered.
- A business that does not spend much money on ‘relevant goods’ may be classed as a ‘limited cost business’ for the flat rate scheme with a rate of 16.5%.
I always recall the wise words of former Taxation editor Mike Truman – while we were enjoying some cricket in London: ‘VAT is usually a straightforward tax it’s the exceptions that catch people out.’
Mike could have been thinking about the ridiculous legislation about VAT and food – with the exceptions to zero rating; the exceptions to the exceptions;...
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