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Agent or principal

Agent or Principal

VAT

The distinction between acting as agent or principal, in relation to the question of whether or when a business must register for VAT, cannot be over-emphasised. This is because VAT registration thresholds are measured in the value of the supply made, i.e. turnover, and not any profit that is derived from the supply. It is therefore fairly obvious that a person who buys someone else’s goods or services must make a supply to the value both of the purchase price and profit added, whereas a person who acts as an agent/intermediary, and charges a commission to either the buyer or seller or perhaps both, will only make a supply to the value of the profit.Read More

Business activity for VAT

How to determine business activity for VAT purposes?

VAT

Irrespective of the basis upon which VAT registration arises, it will only arise in regard to the activity which is “in the course or furtherance of a business”. In plain terms, transactions in return for payment are not within the scope of VAT at all (and are therefore not a “taxable supply”) unless the activity amounts to a “business”. How to determine business activity for VAT purposes?Read More

Voluntary registration

Voluntary registration

VAT

It seems counter-intuitive to apply for voluntary registration before one actually has to do so, but in fact, it is very common for various reasons. These are:
1. to enjoy the fiscal and commercial advantages identified in our previous posts;
2. to ensure that VAT recoverable on start-up costs can be reclaimed in situations where it is inevitable that the business will exceed the thresholds in due course;
3. to avoid waiting too long and failing to register on time.Read More

Hidden Supplies

Hidden Supplies for VAT purposes

VAT

There are several situations where money, or some kind of benefit in kind, is allowed to transfer between entities, but where it may not be clear whether the payment or benefit is consideration which is relevant to the VAT registration requirement and may be treated as hidden supplies for VAT, rather than being no more than a movement of value between entities. Several such situations are considered below, in an attempt to warn readers of possible cases of contention.Read More

transfer of going concern

Defining supplies for VAT Registration

Tax, VAT

Since VAT registration is based on “supplies” made by the entity or VAT taxable supplies, this begs the question as to how one determines when supplies have been made. The following examples help to illustrate what is or what is not a VAT taxable supplies, or what the value of the supply could be. This issue needs to be explored in some depth to avoid a mishap.Read More

Acquisitions from EU

Acquisitions from EU: Further Grounds for Registration

VAT

Acquisitions from EU  and the need to register arise from two possible scenarios:

• buying the goods from a stock situated elsewhere in the EU;
• transferring one’s own goods from an EU site to the UK. The mere act of carrying out acquisitions can give rise to the liability to register for VAT.Read More

transfer of going concern

VAT registration: Transfer of a going concern

VAT

Transfer of going concern commonly gives rise to the need for the transferee to register for VAT even before he has made a single sale. The idea, here, is that a business, once up and running, should not fall out of the VAT net merely by dint of having being sold from one party to another. Thus, it would not be right for the new owner to be able to await breaching the thresholds in order to be required to register for VAT. Transfer of ongoing concern may have different scenarios that are worth analysing to determine whether the business should stay registered.Read More

vat compulsory registration

VAT Compulsory Registration Criteria: How to avoid compliance failure?

Tax, VAT

Most people’s principal concern relates to the VAT compulsory registration criteria, and the need to avoid a compliance failure, with the potential result of unexpected VAT liabilities and penalties that follow from that.Read More

how to avoid VAT

Threshold is exceeded: How to avoid VAT registration?

VAT

If a business fails to register for VAT if the VAT threshold is exceeded, it can be a costly mistake. It is worthwhile to review the basics and try to find exceptions to this rule. How to avoid VAT registration even if the VAT threshold is exceeded?Read More