VAT update February2011

HM Revenue & Customs (HMRC) has updated a number of VAT Notices and issued a number of Revenue & Customs Business Briefs, effective February 2011.

HM Revenue & Customs Brief 06/11

This brief announces the introduction of a lower rate for Climate Change Levy (CCL) for supplies of natural gas in Northern Ireland. Legislation will be amended to reflect this change which will be effective from 1 April 2011. The rate will be £0.00059 per kilowatt hour, which is 65% lower than the usual rate of CCL on gas. The reduced rate is set to run until 31 October 2013, when the derogation expires.

HM Revenue & Customs Brief 05/11

‘VAT: simplification of the “change in use” provisions for buildings zero-rated because they were intended to be used for a relevant residential and relevant charitable purpose’ states that with effect from 1 March 2011 there will no longer be two adjustment mechanisms to apply to the two sets of circumstances where change in use occurs. It allows for a single adjustment. Examples on how the calculation works can be found in VAT Information Sheet 04/11.

HM Revenue & Customs Brief 04/11

This brief confirms HMRC’s view on the VAT treatment of commercially operated sports leagues. The brief clears previous advice that may have been given by HMRC officers which may have led to some confusion. In essence for most parts, supplies made by a commercially operated sports league are liable to VAT at the standard rate. A commercial sports league may:

  • organise a league
  • allocate fixtures to teams in the league
  • provide pitches for teams to play on
  • provide referees
  • determine results
  • keep and publish scores and league tables
  • award trophies to winning teams.

HMRC doesn’t consider the services provided by these operators to fall within the sports exemption of Group 1, Schedule 9 of the VAT Act 1994.

HM Revenue & Customs Brief 03/11

‘VAT: changes to the option to tax for supplies of land and buildings (anti-avoidance rule)’ highlights the introduction of a minor change to the option to tax anti-avoidance rule. The change applies from the 1 March and relates to all supplies arising on grants made on or after that date. The brief goes on to state that ‘under the proposed change a grantor is not treated as in occupation where the conditions of the “2% occupation rule” are met (the conditions largely mirror those of the existing ten per cent rule).’ Section 4 of the note contains details on how the new 2% rule will operate.

HM Revenue & Customs Brief 02/11

The brief highlights a tribunal case - John Price (TC/2010/01287).

Given the fact that the Tribunal had ruled that roller blinds were 'building materials' as defined by Note 22 to Group 5 of Schedule 8 to the VAT Act 1994, HMRC has highlighted the tribunal ruling and agreed that the applicant could recover VAT incurred on the purchase of the blinds under the provisions of the DIY Housebuilders and Converters VAT Refund Scheme (s.35 of the VAT Act 1994). However, it states that HMRC’s position remains unchanged and ‘given the small amount of VAT at stake in this particular case, HMRC will not be appealing this decision further’.

HM Revenue & Customs Brief 01/11

HMRC clarifies its position following the Tribunal decision in Oasis Technologies (UK) Ltd (Case ref TC00581). The case concerned the VAT treatment of Electronic Lottery Ticket Vending Machine (ELTVM). HMRC accepted that ELTVM machines fall within the VAT exemption of Note 1(d) Group 4 of Schedule 9, VAT Act 1994 provided the following characteristics apply:

  • the machine must provide a game of chance;
  • the tickets must be randomly distributed;
  • the player, operator or manufacturer must not be able to influence the order in which a ticket is revealed;
  • the result of the lottery must not be determined or influence by means of the machine; and
  • where groups of tickets have been pre-loaded into a machine, the machine may randomly select a new group when the current one is completed.

HMRC invites claims for any over-declared VAT.