MONEY OFF VOUCHERS
In 1994 I worked for a well-known manufacturer that offered money reduction vouchers to customers for purchased items in stores (referred to as ‘cash back’). The VAT treatment of payments of this nature was laid down by the 1994 European Court of Justice Case of Elida Gibbs (C-317/94). HMRC’s policy states that manufacturers are entitled to reduce the output tax on their sales in respect of the ‘cash backs’, provided that they charged and accounted for VAT on their original supply.
During a visit by an inspector, we were able to prove that VAT was charged and that we had accounted for VAT on the original supply. I was later able to make a successful claim for approximately £100,000 based on this case.
ANTI DUMPING DUTY
A manufacturer that I worked for was shipping large quantities of a product from China that was subject to a high rate of anti dumping duty. I was informed that four ships heavily laden with these products were due to be docked in the UK that day, within a few days of the anti dumping duty being lifted.
I was therefore tasked with getting the cargo into UK free ports to be cleared as imported goods after the duty had been lifted. Within approximately four hours, myself and my colleagues (finance, logistics and warehouse), the clearing agent and our HMRC Customs inspector, successfully re-directed three of the ships into customs-free zones, thus saving just under a million pounds worth of duty.
A trader had certain products manufactured by a third party in China using machinery and moulds situated in the manufacturer’s premises but owned by the trader (importer).
Unfortunately, both my client and the Chinese manufacturer did not fully understand the EU legislation relating to the value of imported/exported goods. The agent therefore based the import value of the product imported during the previous few years on the invoice from the manufacturer and other costs. This invoice did not include the cost of the machinery used.
During a routine Customs assurance audit, the inspector found the invoices for the machinery and issued a pre-decision letter to charge import VAT duty on the full £1.5m cost of the machinery. The calculated duty and VAT was approx £266k, to be spread over all of the items produced by the machine.
Luckily we were able to prove that very few of the products were actually imported to the UK and the potential UK VAT liability was thus reduced to around £6k.
NOMINAL LEDGER REVIEW
I reviewed a client’s nominal ledger and was able to recommend that £3m from the balance of a reserve account be written back to profit.
EXPENSE CLAIMS REVIEW
Staff processing business expenses may not have the time or knowledge to claim the correct VAT and therefore the VAT is only recovered if the claimant calculates it and enters the amount in the correct box. As part of a compliance assurance audit, my team submitted a reclaim for over £20k of VAT in respect of a client’s business expenses.
BACKDATED REPAYMENT CLAIMS
Based on the rulings of a court case, a client was able to re-classify an income stream from “non-business” to “business” status. This enabled the VAT on all purchases relating to that income to be reclaimed, thus increasing future profit. We were also able to submit a three year retrospective VAT reclaim (now four years) for approximately £4m.
Based on the rulings of a court case I was able to put forward that a client’s educational courses, which were deemed to be standard rated, were eligible to be an exempt supply and therefore cheaper for students. This did however, make that business partially exempt. We therefore calculated the preferential method of input VAT reclaim.
An accountant requested my help for one of their clients who had received a £95k assessment following a VAT compliance visit. The client had been incorrectly advised by his Italian supplier that particular calendars were classified as being magazines and therefore zero rated for VAT (4% in Italy). As a result, an assessment had been raised in respect of four years worth of deemed income.
After an in-depth review of those four years I was able reduce the assessment to £15k, which included VAT due on another source of income not previously declared. Apparently, the overstated £95k assessment had originally been raised by HMRC as all letters requesting information had been ignored by the client.