In Shaw v HMRC  UKFTT 0381 (TC), the First-tier Tribunal (FTT) has cancelled late filing penalties because HMRC had not satisfied the statutory requirements of section 8(1), Taxes Management Act 1970 (TMA) as a notice to file had not been validly served on the appellant.
— Read on www.rpc.co.uk/perspectives/tax-take/shaw-tribunal-cancels-penalties/
In an important judement delivered at the end of June the Court of Appeal (Civil Division) held that Input VAT could not be recovered in the absence of an invoice showing VAT had been charged.
The court ruled that ‘in the absence of a VAT invoice showing that VAT was charged to Zipvit by Royal Mail’, Zipvit could not recover any input tax (even if that input tax was ‘due and paid’). Although HMRC do have discretion to accept evidence which does not fully comply with the statutory requirements for a VAT invoice, the court found that there was no support in the legislation or case law ‘for the proposition that a right to deduct may be recognised and given effect without production of a VAT invoice showing that the tax in question has been paid by the supplier’.
We were recently asked by a client to help assess and pick an expenses solution for their business. The business has about 200 people although probably about half of those don’t really travel or incur expenses regularly, and some of the people are based outside of the UK. Our client wanted a solution that enforced policy and improved compliance with receipt collection and VAT recovery. The project was borne out of an earlier piece of work we did for them on their non pay-rolled expenses to calculate and report their tax and class 1 liabilities. Having identified the options we negotiated the terms of the contract on behalf of our client. Implementation of the project is nearing completion and the system in now partially live and intended to be fully live by the end of the month. The cost of the project will be covered multiple times over by the savings in VAT recoverable and tax and class 1 NI.
Our short list went down to two providers, but in the end we chose Webexpenses over Concur on the basis of pricing transparency. Concur did offer a little more functionality but their pricing model in unfathomable and this was, quite rightly a significant concern for our client.
HM Revenue and Customs updated their guidance on Making Tax Digital (MTD) last week. It’s not the easiest of reads but it does set the tone to what to expect when this burdensome legislation comes into force in April next year. Most important takeaways for us are the digital record keeping requirements and the digital links definition that flows from that.
The “functional compatible software” in which the VAT information is recorded can be a number of software programs, products, applications or spreadsheets which are digitally linked together. A digital link is an electronic or digital transfer or exchange of data between software programs, products or applications.
The VAT notice warns that the use of “cut and paste” does not constitute a digital link. However, using digital links between software to transfer data needed for the VAT return won’t be compulsory until VAT periods starting on or after 1 April 2020. This constitutes the “soft landing” which HMRC have said will be applied in the 1st year.
HM Revenue and customs latest guidance can be found HERE