4 June 2014    |    Taxation

VAT complexities

VAT complexities

All too often VAT is assumed to be straight forward and simple by those who have been registered for some time, and who forget the complexities that can easily arise.

It is important never to become complacent about VAT, and to read the notes and updates that are issued by HMRC, and to stay in touch with changes in the rules.

It is simple if all your sales are in the UK and are standard rated, but when either of these two tests is not met, then problems can arise.

Our most frequent questions from clients about VAT relate to land and buildings, and are generally from householders trying to zero-rate a new build, or a bit of a new build, or an annex; and often we have to dig deep to find the information to allow us to give answers.  Some answers can be conditional: landscaping may be zero-rated when done at the same time as the build.  Please note “may be” as even then there are further tests to meet before zero-rating arises.

We have even had complex questions about what qualifies as a new build, with long-derelict croft houses, Grade 1 listed buildings with the roof still on but the body a shell, and a new charitable building part used for commercial business all causing us and the clients great headaches in recent times.

Food is another classic area for retailers, where there is a potential minefield for getting it wrong.

The simple message is that if in doubt, you should check it out and get clear advice from us at the outset.  It might cost a modest amount of money to save you substantial amounts of VAT in the long run.

To give you an example of the potential complexity, one needs only to look the HMRC “Fur skin flowchart” to imagine the difficulties in getting the VAT rate right if you sell clothing that has any fir or hair on it.  We’re still not sure why Mongolian, Yemeni and Tibetan goats seem to get such a hard time from HMRC!

VAT complexities



The information provided is for general information purposes only.

Legislation and details may have changed since this was written.  The text may not include all matters that are relevant to your individual situation.

You should not make decisions, or refrain from making decisions, without taking further professional advice about your specific circumstances.

Trinity House
31 Lynedoch St.
G3 6EF

71 King Street

49-50 Bayhead

Website by Haiwyre