9 April 2010

Potential VAT Recovery

There are two situations, albeit remote for most of us, where due to a change in the interpretation of the law it may be possible to pursue VAT reclaims VAT on Postal Services The European Court of Justice in R (TNT Post UK Ltd) v HMRC decided that the scope of the UK exemption for postal services was too wide regarding the services of Royal Mail. Following the decision there is potential to claim to recover input tax on the basis that charges made by Royal Mail on services outside the Universal Postal Services exemption included embedded VAT. As with all such matters including back dated claims arising from a change in interpretation of law the situation is not straightforward. At this stage, if your business spends in excess of 3,500 per annum on postal services it is worth looking in to this. Sports Clubs charging VAT Where a sports club charges non-members for use of their facilities, HMRC has taken the view that VAT should be charged. However, following a case law development, HMRC has now admitted that its policy was wrong and that, in fact, much of this income should have been VAT exempt. For members clubs there are two potential VAT claims:

• where the club has darts, snooker, pool, or billiards teams, and you have paid VAT on the whole of the membership fee, then a VAT claim is possible going back four years of up to 25% of the VAT paid; and
• where you have live entertainment and have paid VAT on admissions, it may be able to recover a large proportion of the VAT paid to HMRC. This also applies to entertainment income at sports clubs.