News
Change in VAT treatment for certain supplies made by employers under salary sacrifice arrangements - ****UPDATE****
Following their brief earlier in the year (see our archived news section for details), HM Revenue & Customs have announced further guidance on the correct VAT accounting treatment for salary sacrifice agreements which were in place before 28 July 2011 and will run after 31 December 2011.
Essentially, if a salary sacrifice agreement was contractually agreed before the original briefing of 28 July, HMRC will accept that VAT is not due on taxable benefits until such time the agreement is reviewed (the normal annual review will qualify as a new agreement).
The full brief can be read at the following link: Revenue & Customs Brief 36/11
Defined benefit pension schemes: exempt or standard-rated supplies?
The Taxes Tribunal has referred the case of Wheels Common Investment Fund Trustees Ltd (Wheels, Case no. LON/2008/0720 – see transcript here [TC01381 doc attached to be linked]) to the European Court of Justice (ECJ) to determine whether pension fund investment services for defined benefit schemes are exempt from VAT rather than being standard-rated. (This will have no bearing on insurance-backed schemes, where the investment advice is exempt from VAT as part of the making of arrangements for a supply of insurance.)
At the moment, defined benefit scheme pension fund investment services are standard-rated, with the VAT charged being a cost to the pension fund to the extent that it relates to security transactions within the EU. If the ECJ rules in Wheels’ favour, the Investment Fund managers will have to exempt charges from that time and there will be an opportunity to correct what would then be past overcharges of VAT.
Action required
We suggest two possible course of action at this stage:
1. If you/your pension fund is accounting for VAT under the “reverse charge” principle in respect of non-UK investment fund managers’ services, it will be necessary to lodge a protective claim for VAT overpaid;
2. If you or your pension fund pay/s VAT to UK investment fund managers, you should ask the managers concerned to advise what action they are taking to protect your/the pension fund’s position in light of the Wheels case. Subsequent action may then depend on the answer you receive.
At the moment HMRC allows employer companies to recover 30% of the VAT on investment managers’ service as being attributable to the cost of managing the pension fund. It is unclear at this stage what HMRC’s view on this administration cost will be in the light of a ruling by the ECJ in favour of Wheels.
HRMC have announced planned changes to the submission of Intrastat Declarations
HM Revenue & Customs (HMRC) have published draft legislation with the intention of introducing the following changes from April 2012:
· all Intrastat declarations will have to be made on-line; and
· the deadline for submission will change from the last day of the month to the 21st, so that, for example, Intrastat returns for April 2012 will need to be made by May 21.
Action required
If you (or your agent) already submit/s Intrastat returns on-line, the only action required is to confirm that the revised deadlines from April 2012 can be met.
If you (or your agent) currently submit/s paper copy Intrastat returns, you will have to take action now to ensure that you are in a position to comply with the new requirements
