VAT Update - March 2014

This notice replaces the December 2012 notice of the same name.

The notice provides guidance on the relief from customs duties when you reimport European Union (EU) goods that have previously been exported from the EU for processing, or for repair using Outward Processing Relief (OPR).

It explains the conditions under which you can claim the relief. The update covered contact details, the removal of OPR Customs Procedure Code details, other than for simplified authorisation, and the inclusion of civil penalty information that can result in a penalty of £2,500 per contravention.

This notice replaces the August 2012 notice of the same name.

The notice explains the customs procedure and relief available under Processing Under Customs Control (PCC) arrangements.

The update covered contact details and the inclusion of civil penalty information that can result in a penalty of £2,500 per contravention.

This notice replaces the October 2011 notice of the same name.

The notice explains when food can be zero-rated.

The update included, belatedly, information about the treatment of sports nutrition drinks and stated that sports energy and nutrition drinks are specifically standard-rated with effect from 1 October 2012 under VATA 1994.

This notice replaces the July 2012 notice of the same name.

The notice provides guidance on output and input tax treatments of vehicles and expenses.

This notice replaces the June 2011 notice of the same name.

The notice provides guidance on the VAT treatment of:

• education;
• research;
• vocational training;
• goods and services provided in connection with these activities; and
• examination services.

The notice has been extensively updated and includes areas such as research where the 2013 changes have been incorporated.

This notice replaces the September 2007 notice of the same name and incorporates and replaces Notice 221A from January 2012.

The notice explains inward processing where payment of Customs import duties and import VAT may be suspended (or later repaid) when goods imported from outside the EU (third country goods) for processing are then re-exported/exported from the EU.

The notice has been extensively rewritten.

This brief sets out HMRC’s tax position and focuses on the VAT, corporation tax, income tax and capital gains tax treatment. 

For VAT purposes and until the treatment is decided by the European Union, HMRC has highlighted the following:

1. 'Income received from Bitcoin mining activities will generally be outside the scope of VAT on the basis that the activity does not constitute an economic activity for VAT purposes because there is an insufficient link between any services provided and any consideration received.
   
   
2. Income received by miners for other activities, such as for the provision of services in connection with the verification of specific transactions for which specific charges are made, will be exempt from VAT under Article 135(1)(d) of the EU VAT Directive as falling within the definition of 'transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments.
   
   
3. When Bitcoin is exchanged for sterling or for foreign currencies, such as euros or dollars, no VAT will be due on the value of the Bitcoins themselves.
   
   
4. Charges (in whatever form) made over and above the value of the Bitcoin for arranging or carrying out any transactions in Bitcoin will be exempt from VAT under Article 135(1)(d) as outlined at 2 above.'

HMRC has also stated that 'in all instances, VAT will be due in the normal way from suppliers of any goods or services sold in exchange for Bitcoin or other similar cryptocurrency.

'The value of the supply of goods or services on which VAT is due will be the sterling value of the cryptocurrency at the point the transaction takes place.'

HMRC also states that 'whether the treatment of income received from, and charges made in connection with, activities involving Bitcoin and other similar cryptocurrencies will be subject to Corporation Tax, Income Tax or Capital Gains Tax depends on the activities and the parties involved'.

It states that 'businesses which accept payment for goods or services in Bitcoin there is no change to when revenue is recognised or how taxable profits are calculated'.

Clearly the treatments are fluid and evolving, and businesses and advisers will need to recognise that tax treatments may change.

This brief follows the decision in the case of Goals Soccer Centres plc [2012] UKFTT 576 (TC) and explains the change in HMRC policy following the First Tier Tribunal (FTT) decision.

The decision found that there were two separate supplies being made:

• a supply of land (the pitches) which was exempt as the relevant conditions were met, and
  
  
• a supply of administration and management services which was standard rated.

It’s been highlighted that the separate supply change will apply to businesses that hire pitches from third parties such as local authorities, schools and clubs.

HMRC states that the treatment 'will only apply where there is a series of lets in accordance with the conditions set out in Note 16, Group 1, Schedule 9 of the VAT Act 1994.'