VAT Newsletter October 2010
Leisure trusts providing all inclusive membership schemes
HMRC have issued a brief (3rd September 2010) that explains how leisure facilities can exempt their inclusive membership.
With effect from 1 April 2009 HMRC amended its interpretation of the law and therefore its guidance on the VAT treatment of membership schemes allowing unlimited access to leisure facilities in a leisure centre. Businesses that will be most affected are community leisure centre’s that are run by non-profit making trusts. Supplies made by commercial organisations are not affected and remain taxable at the standard rate.
The effect of this change is that since 1 April 2009 non-profit making bodies, including leisure trusts which were previously charging VAT on their all inclusive packages, will in the majority of cases have to treat them as exempt. If businesses make both exempt and taxable supplies they will be partly exempt and will have to apply the partial exemption rules to determine how much of the Input Tax incurred on their costs can be deducted.
Comment: The scheme should have been implemented from 1 April 2009 and there is no requirement to make adjustments in respect of supplies made prior to that date. However, where a business wishes to make a claim to HMRC for repayment, they may do so.
Do you supply goods for use as ships’ stores?
This is a reminder that supplies of goods for use as ships’ stores can be zero-rated only when specific conditions are met. In particular, stores are only eligible for zero-rating if they are for use on a commercial voyage with an eventual destination outside UK waters.
You must get written confirmation of this from the ship’s master, owner, or authorized agent for each order you supply. You can, however, zero-rate supplies of marine fuels for use on commercial voyages inside UK waters subject to certain conditions.
Comment: Find out more about the conditions for zero-rating stores and marine fuel in section 10 of Notice 703 Export of goods.
Motor trade issues
HMRC have issued guidance which clarifies the definition of motor cars. The clarification has been found necessary due to recent difficulties and blurred distinctions between categorising cars and vans in relation to definitions in VAT legislation.
The guidance refers to a list of car-derived vans on which VAT may be deducted. The list is based upon information supplied by manufacturers and is specific to vehicles which are produced or converted by the manufacturers or sole concessionaires and have been notified to HMRC.
The full list of car derived vans can be found here.
Proposed reverse charge accounting for businesses trading in emissions allowances
Businesses selling or purchasing emissions allowances in the UK will need to be aware from 1st November 2010 there will be an introduction of UK legislation to allow reverse charge accounting for emission allowances.
Reverse charge accounting mechanism will apply to:
• a transfer of an allowance,
• a transfer of an emission reduction unit which can be used by an operator for compliance with the scheme
• a transfer of a certified emission reduction which can be used by an operator for compliance with the scheme
At the same time the temporary zero rate for emissions allowances, including options, will be withdrawn.
Comment: It is the responsibility of the customer, rather than the supplier, to account to HMRC for VAT on supplies of the specified emission allowances.
