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Markel Tax

14 May 2020

What is keeping VAT consultants busy?

Over the last few weeks the economy hasn’t disappeared, but there have been seismic shifts. 

Judging by the queries we’re receiving in the VAT team, there is activity in the property/construction sector, in financial services, business sales, technology, cross-border supplies and even the yacht and aircraft sector where we’re unexpectedly receiving the same level of enquiries.  Taxpayers are still receiving challenges from HMRC and keeping up with ongoing live tribunal cases is both essential and a necessity where required. Covid-19 related work raises VAT queries and conundrums and we are helping where we can.

VAT gives an interesting snapshot of how and why businesses are reacting during lockdown. For example, one reason the property sector has remained active is that construction projects have a time horizon of months and years, and planning continues to press ahead. VAT advice is sought to ensure reduced rate VAT or zero-rating is achieved where available or VAT on costs are minimised or recovered to the maximum extent possible. The issues remain wide and varied. For example, what happens if new dwellings are converted from existing buildings, but some features of the existing building are retained for safety reasons? What is the level of VAT risk with different proposed designs? How can VAT and SDLT costs be eliminated when transferring a business with a property?  Can a project be managed to assist an individual client to recover VAT on professional and construction costs or eliminate the VAT on such costs altogether? 

Such queries are normally best dealt with at the planning phase of property projects, and where VAT advice is received in a timely manner, huge savings can be achieved. Looking to the future, we’re now anticipating that the next phase of VAT queries will relate to the new domestic reverse charge for contractors. The new domestic reverse charge rules are currently due to come into force on 1 October 2020 for supplies of construction services to certain business clients. Both contractors and sub-contractors will be affected and getting it wrong could prove costly. 

Timetables have been disrupted for businesses, but despite that we’re here to help them get their VAT positions  back on track.

Our COVID-19 Hub contains a range of information and resources to best support our clients during this difficult time. To receive the latest news and insights by email sign-up here

Tagged HMRC Value added tax (VAT) services COVID-19
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IHT – Emergency service personnel exempt from IHT