Latest VAT news

VAT is moving online

From 1 April 2012 virtually all VAT registered businesses with an annual turnover under £100,000 will have to file their VAT returns online and pay any VAT due electronically or face penalties. HMRC will write to all these businesses in February 2012 to explain the new legal requirements and the help and support available to taxpayers.


Businesses are being urged by HMRC to register online early in order to avoid last minute panics. To sign up to VAT Online services, go to www.online.hmrc.gov.uk. You will need to input some facts from your last VAT return and the VAT4 (your Certificate of VAT Registration). When you have signed up, you can then file your VAT return online straightaway without having to wait for an Activation PIN to arrive in the post. If you’ve misplaced your VAT4, you can ask HMRC to send you your ‘effective date’ using the online form, go to www.hmrc.gov.uk/online-services-questions.

There are beginners guides at www.hmrc.gov.uk/vatmoving in the ‘help and support’ section and an online demonstrator at www.hmrc.gov.uk/demo.

The VAT Online helpdesk can also offer lots of support from Monday to Friday, 8am to 6pm (except Bank Holidays). Tel: 0845 010 8500

Golf Club Green Fees

Following the decision of the First-tier Tribunal in the case of The Bridport and West Dorset Golf Club Limited, HMRC refuse to accept that green fees are exempt from VAT.

The issue before the tribunal was whether the charges to non-members for the right to play golf were exempt from VAT or, as HMRC maintained, standard-rated.

Under Value Added Tax Act 1994, Schedule 9, Group 10, Item 3, supplies by non-profit making bodies of services closely linked with, and essential to, sport to individuals taking part in sport are exempt from VAT. However, where the body operates a membership scheme, any supplies to individuals who are not members are excluded from the exemption and are subject to VAT. Supplies by profit-making proprietary clubs are standard-rated.

The tribunal concluded that by restricting the exemption to supplies made to members, the UK law was contrary to the purpose of the exemption in the Principal EC VAT Directive and failed to correctly implement its terms. The tribunal was not persuaded by HMRC’s argument that the exclusion applied to non-members was justified on grounds that it reduced distortion of competition. As a result, the tribunal agreed with the golf club that supplies to non-members of green fees were exempt from VAT.

HMRC believes that the tribunal has erred in interpreting EU law and remains of the view that where clubs that run membership schemes make charges to non-members for the use of certain sporting facilities, such as green fees, the charges are standard-rated. They have, as a result, sought permission to appeal to the Upper-tier Tribunal.

Decisions of the First-tier Tribunal are binding only on the parties to the decision. Consequently, HMRC do not propose to pay other claims already submitted and are not inviting new claims in the wake of this decision. Any claims that are submitted will be rejected.

HMRC consider that businesses should continue to follow the guidance in Notice 701/45 Sport and standard-rate supplies made to non-members of a membership club. Should any golf clubs decide to exempt their green fees on the basis of the First-tier Tribunal's decision, HMRC will assess the underdeclared tax and enforce the assessments. Penalties may also be applicable in such cases.

Flat Rate Scheme - Bank interest can be excluded from turnover


In the cases of Thexton Training Limited and Fanfield Limited, the Tribunal ruled that where the receipt of bank interest is derived from the taxable activity of a business, such interest is a relevant supply for the purposes of the Flat Rate Scheme (FRS).

Conversely, where the receipt of bank interest is not a direct result of the taxable activity of a business, such interest falls outside the scope of VAT and is not a relevant supply

This finding gave rise to the potentially confusing situation where FRS users were required to determine whether or not to include bank interest in their flat rate turnover.However, HMRC has now decided that, for simplification purposes, all FRS users can exclude interest from their flat rate turnover.