It’s the start of the first full working week of 2018. I like the new year and the sense of renewed resolution and it’s a good time to think about the year ahead and how we’re hoping to use the time.
And one of those things is wondering just who has time for VAT avoidance?
New DASVOIT provisions
HMRC has issued Notice 799: disclosure of VAT avoidance schemes for VAT and other indirect taxes, which explains the new disclosure provisions that came into effect on 1 January this year. At 75 pages long, it’s not exactly bed time reading.
The effect of the new rules is to shift the responsibility for notifying HMRC of potential avoidance to the promoter of the arrangements, or anybody who introduces the promoter to a potential client. Under the previous arrangements, it was the responsibility of the business that implemented any such arrangements to notify HMRC. Now, the liability lies with the promoter of the arrangements, although there are still some circumstances where the the business is liable – in particular where the arrangements are “designed” in house.
In some respects, this development makes sense. In the past, tax advisors have made very good money from selling such information, particularly where the fee is based on a percentage of the tax or VAT saving, while the business has to notify HMRC, deal with the practical implementation of the arrangements AND any fall out should HMRC challenge the arrangements.
The ruling in Halifax in 2004 changed the landscape for VAT avoidance, because it enabled HMRC to introduce legislation to recover any VAT “advantage” from the business, so businesses were less likely to use the schemes. But clearly there are still many advisers who come up with such ideas and make money from them.
I’m not really in a position to criticize – I worked for the big accountancy firms during the 1980s/90s and their services included identifying sometimes aggressive planning to help clients save money. However as an independent VAT consultant, I don’t get involved with such schemes. Most of my clients are not interested in such arrangements. Indeed, some clients actually over-declare their VAT liability as they do not want to be associated with avoidance, never mind having the hassle of dealing with the fall out of such arrangements. In particular, partly exempt clients are very nervous about even making genuine errors on their VAT returns, especially where it relates to large value expenditure on property.
So it does beg the question – who has time for VAT avoidance? I certainly don’t.
Dambusting inspiration for the year ahead
When it comes to the new year, I usually look back on events of the previous year in my own life. But recently I’ve been thinking about the astonishing achievements of some people who have lived long lives. Last week I watched an interview with George “Johnny” Johnson, the last remaining crew of the infamous Dambusting team from WW2. My father and most of his generation, also fought in the war and it clearly shaped the life of all of those involved significantly. Of course many didn’t survive and we should never forget their sacrifice and contribution to our lives today.
But the thing that struck me most about the interview was Mr Johnson’s amazing mind and clarity of thought. We assume that people in their 90s are frail in mind and body, but Mr Johnson was quite the opposite. The interview itself – for the BBC’s Hard Talk programme – was interesting in content, discussing the effects of the bombing campaign itself and the people involved in its planning and execution.
So if you need a bit of inspiration for the year ahead, watch the interview with Mr Johnson. I’ll be surprized if it doesn’t inspire you!
Either way, have a very happy and healthy 2018!