VAT Hot Topics

Wednesday, October 31, 2012

by Nick Ryan

The last ten months or so has been a very busy period for the VAT Practice and thank you for all your interesting questions and guidance sought. During this period we have provided assistance on a number of interesting and complex issues and we thought it would be interesting to summarise some of the areas we are providing assistance on. Here are the top five…
1. Property: Not hard to guess this would be on the list but what an array of questions and issues. Big focus on sales by receivers and these highlight the need to fully complete the pre-contract VAT enquiries. The sale of old properties and meaning of developed are also providing for confusion on how to treat a sale for VAT purposes. The management of leases under both old and new rules has provided for some interesting discussions and the application of both the old waiver of exemption and the current option to tax have highlighted a number of problems resulting in significant VAT liabilities being identified. The buy to let scheme and similar schemes are also highlighting problems both in the accounting of VAT and the management of the Capital Goods scheme and the required adjustments for properties put to an exempt use.
2. E-tailers/distance sellers or, rather “You are not exporters!”: Here the key issue is one of understanding the VAT status of the business and how VAT should be accounted for on the sales made. Many distance sellers have fallen into the trap of misunderstanding VAT terminology and the differences between EU trade and non EU trade. Multi-jurisdictional VAT registrations are often required and, in some case, there is a need to negotiate a retrospective position with the local tax authority.
3. The travel/Event industry: “TOMS/TAMS or not TOMS/TAMS that is the question? Here we are advising a range of clients whose activities provide for a TOMS/non Toms mix. The management of these activites and determination of identifying which category they fall into has shown how complex this area can be.
4. Cross border supplies: Here the place of supply of services rules as introduced in January 2010 has shown itself to be the bearer of confusion. The differences as to what falls within the General rule and what services are considered to be encompassed within the Special rules has created a number of liability issues with VAT incorrectly accounted for. Land related services are also high on the agenda. For goods, the place of supply rules also creates problems and with businesses looking at new transaction routes for the supply, manufacture and delivery of goods then multi-jurisdictional issues have been identified and the problems they can create where VAT registrations are not in place.
5. Mixed/composite supplies: when is a service not a service? A lot of issues here in both the services industry and catering industry with a concern on managing the competitive environment and demands of the customer to keep costs to a minimum. This is often at the expense of applying the correct VAT rate/treatment and the potential VAT problem and liability this can result in for the supplier if challenged by Revenue.
These are just some of the issues we are advising on and should you have any questions on these, or require assistance on a particular VAT matter, then please contact Nick Ryan, + 353 238838181 or

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