Fund management
HMRC have set out their view of the current position concerning claims made in respect of VAT charged on fund management services.
The EC VAT Directive (formerly the Sixth Directive) exempts 'management of special investment funds as defined by Member States'. The UK applies this exemption to the management of authorised unit trusts, open-ended investment companies, and trust-based schemes but not to the management of other funds, including investment trust companies.
More than acting
Customs served a notice requiring security for VAT on the company, marked for the attention of the 'directors'. The company continued to trade and did not provide security. It made an out of time appeal against the notice, but later withdrew it. Customs took proceedings against the defendant, a de facto director of the company, under VATA 1994, Sch 1 para 4(2) and Customs and Excise Management Act 1979, s 171(4), on the grounds that the company had issued invoices without providing security. The director was convicted and appealed by way of case stated.
Most favoured?
The claimant provided flight security services in the Czech Republic. It had recourse to training courses in Germany, which in 2002 were subject to German VAT. The claimant applied for a VAT refund but this was denied on the ground that under German turnover tax law, a non EC trader could only be credited with input tax if there was no turnover tax in its country or, if there was such a tax, it was credited to undertakings established in Germany. At the relevant time, the Czech Republic did not grant input tax refunds to German traders.
Too late!
HMRC applied for an extension of time to appeal against a tribunal VAT decision. Under Civil Procedure Rules SI 1998/3132, 52PD 23.8(2)(b), the appellant who wished to appeal had 56 days after the date of the decision in which to do it.
Electronic risk
The claimant supplied, installed and maintained computer hardware and software for the insurance industry. The software enabled insurance brokers to carry out certain transactions with insurers, over the claimant's communication systems.
Customs ruled that the claimant's software was able to assess and accept risk on behalf of the insurers. Later in April 2004, Customs said that the claimant's services were not VAT exempt, and issued an assessment in January 2005.
The claimant applied for judicial review in April 2005.
Exempt credit
Under an agency agreement acting in the name of DVAG, a German company (the claimant) acted as a financial adviser for potential clients with a view to them obtaining credit. If a contract was concluded, the lender paid a commission to DVAG, which then paid a commission to the claimant. The claimant said that the commission was VAT exempt.
Lennartz
In the 2007 Budget, three measures were announced concerning the VAT treatment of assets to be used partly for non-business purposes, see Budget Note 56 on www.hmrc.gov.uk. The note confirms that the 'Lennartz accounting' regulations, which were due to come into force on 1 September 2007, will now come into force on 1 November.
VAT and home PCs
HMRC have published their revised policy on the VAT treatment of computers made available by employers for use in their employees' homes, following the withdrawal of the tax exemption which allowed employers to loan computer equipment to their employees tax free in April 2006.
Download the exclusive Xero
free report here.
