Just a quick fact this week! As the economic forecasts are downgraded around us this is a time to be thrifty, and even William and Kate are renovating their Kensington Palace apartment rather than moving to a newer more functional home Link to intrusive article on Will & Kate's personal life. So, you’re probably wondering if this is simply more convenient, or do Will and Kate know something that we don’t know?
And the answer is probably that the second. Unlike work on an ordinary home, an approved alteration of a protected building (for example listed building) is subject to 0% VAT, and this includes the building materials that they use. So where as you or I will probably end up paying 20% VAT on our loft extension, for older more historic dwellings the treatment is different.
25 Jan 2012
18 Jan 2012
Joey the Horse
No doubt everyone will have been excited to see the attendance of Joey the horse at the UK premier of Steven Spielberg’s War Horse this week Link to article on War Horse Premier. Although, like me, you might have been concerned as to the VAT implications of his foray to the UK.
Unlike “meat animals” the supply of horses is standard-rated, and so, in common with any racehorse, Joey could be expected to pay 20% import VAT on arrival. We would hope he could get around the relevant import duty and VAT under temporary importation relief, which would usually allow a temporary stay of up to two years in the EU. However, the legislation does refer to “import for training, breeding, veterinary
treatment, participation in a race, or grazing” and so we would probably want to seek a ruling on import for attendance at a movie premier.
Should Joey be paid attendance money, his position would be similar to that of racehorses; whilst prize money is usually outside the scope of VAT, attendance money or guaranteed prize money is subject to VAT. We would also need to look at the VAT establishment of the supplier who owns Joey (different to establishment for CT purposes) in order to determine whether the place of supply is in the UK or otherwise.
Unlike “meat animals” the supply of horses is standard-rated, and so, in common with any racehorse, Joey could be expected to pay 20% import VAT on arrival. We would hope he could get around the relevant import duty and VAT under temporary importation relief, which would usually allow a temporary stay of up to two years in the EU. However, the legislation does refer to “import for training, breeding, veterinary
treatment, participation in a race, or grazing” and so we would probably want to seek a ruling on import for attendance at a movie premier.
Should Joey be paid attendance money, his position would be similar to that of racehorses; whilst prize money is usually outside the scope of VAT, attendance money or guaranteed prize money is subject to VAT. We would also need to look at the VAT establishment of the supplier who owns Joey (different to establishment for CT purposes) in order to determine whether the place of supply is in the UK or otherwise.
A few interesting facts about VAT
This is a Christmas special that I wrote for Harry's blog http://www.trivialpursuits.org/. Hope you enjoy...
To help whip up some enthusiasm for my forthcoming article on “Growth and Taxation” (yes, the title may be dry but the content will juicy), here come some Christmas VAT pleasers to add extra entertainment to your family gatherings this December.
Britain’s favourite VAT fact, as demonstrated by a Sun newspaper poll on the topic (this is not the link but I couldn't find the real one), concerned the biscuit status of our beloved Jaffa Cake. This fervent argument which rumbled all the way to tribunal, all stemmed from differing treatment of chocolate covered biscuits (20% VAT) and chocolate covered cakes (0% VAT). Whilst the taxman would contend (and still does) that it looks like a biscuit, is packaged like a biscuit, is used like a biscuit, Sun readers think it’s a biscuit, and basically it is a biscuit, the courts thought otherwise. And a VAT fact was established: cakes go hard when stale whereas biscuits go soft. FACT.
And Jaffa’s are not alone. Various interpretations of the tax law on food have lead business to make some quite bizarre claims about their own products. Pringles were so keen to get away from the 20% VAT charged on “potato crisps and similar products” that they went all the way to the Court of Appeal to claim that Pringles are not made from potato. Which makes you wonder what they are made from; I think “oil” featured heavily in the discussions. And Lucozade are currently of the view that Lucozade Sport is not, as might be thought, a beverage, but in fact a “functional food”. Watch this space for more news on that battle.
Because, you see, the watchful eye of VAT encompasses all we do. There is really no escape. Just look to the judgment in R&J Polok t/a Supreme Escorts; establishing the VAT FACT that just because what someone is doing is illegal, it doesn’t mean it’s not subject to VAT. In its summary the High Court surmised that to not charge VAT on Supreme Escorts’ services would give a competitive advantage over escort and introductory agencies that did not provide sexual services. You can’t argue with logic like that.
So think fondly and muse on VAT over the Christmas period. And next time you enjoy a Toasted Sub, you can ponder on whether Subway were correct when they maintained that it is not a “hot food”. And as you slurp its fruity goodness give a thought to whether your Innocent Smoothie is really, in fact, a “liquefied fruit salad”?
To help whip up some enthusiasm for my forthcoming article on “Growth and Taxation” (yes, the title may be dry but the content will juicy), here come some Christmas VAT pleasers to add extra entertainment to your family gatherings this December.
Britain’s favourite VAT fact, as demonstrated by a Sun newspaper poll on the topic (this is not the link but I couldn't find the real one), concerned the biscuit status of our beloved Jaffa Cake. This fervent argument which rumbled all the way to tribunal, all stemmed from differing treatment of chocolate covered biscuits (20% VAT) and chocolate covered cakes (0% VAT). Whilst the taxman would contend (and still does) that it looks like a biscuit, is packaged like a biscuit, is used like a biscuit, Sun readers think it’s a biscuit, and basically it is a biscuit, the courts thought otherwise. And a VAT fact was established: cakes go hard when stale whereas biscuits go soft. FACT.
And Jaffa’s are not alone. Various interpretations of the tax law on food have lead business to make some quite bizarre claims about their own products. Pringles were so keen to get away from the 20% VAT charged on “potato crisps and similar products” that they went all the way to the Court of Appeal to claim that Pringles are not made from potato. Which makes you wonder what they are made from; I think “oil” featured heavily in the discussions. And Lucozade are currently of the view that Lucozade Sport is not, as might be thought, a beverage, but in fact a “functional food”. Watch this space for more news on that battle.
Because, you see, the watchful eye of VAT encompasses all we do. There is really no escape. Just look to the judgment in R&J Polok t/a Supreme Escorts; establishing the VAT FACT that just because what someone is doing is illegal, it doesn’t mean it’s not subject to VAT. In its summary the High Court surmised that to not charge VAT on Supreme Escorts’ services would give a competitive advantage over escort and introductory agencies that did not provide sexual services. You can’t argue with logic like that.
So think fondly and muse on VAT over the Christmas period. And next time you enjoy a Toasted Sub, you can ponder on whether Subway were correct when they maintained that it is not a “hot food”. And as you slurp its fruity goodness give a thought to whether your Innocent Smoothie is really, in fact, a “liquefied fruit salad”?
VAT Fact - Liz Taylor Auction
You may have seen the news about the record breaking €115m auction of Elizabeth Taylor’s jewellery in New York last night. So no doubt you’re wondering what the VAT implications are of bring some of these beautiful items back to the UK? So...
Generally you’d expect jewellery to attract 20% import VAT;
But if you snapped up the $11m pear-shaped 16th-century pearl, once owned by England's Mary Tudor, this would qualify as an antique and an reduced effective VAT rate of 5%;
And similarly, if you could successfully argue that the $4.2m tiara (a birthday gift in 1957) is an item of historical significance, the 5% could also apply.
Generally you’d expect jewellery to attract 20% import VAT;
But if you snapped up the $11m pear-shaped 16th-century pearl, once owned by England's Mary Tudor, this would qualify as an antique and an reduced effective VAT rate of 5%;
And similarly, if you could successfully argue that the $4.2m tiara (a birthday gift in 1957) is an item of historical significance, the 5% could also apply.
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