Storyboard for

1. Recovering incorrectly charged VAT Storyboard for

2. …clear thinking

3. By completing this module you will be able to: Explain the procedures for recovering incorrectly charged VAT Avoid the pitfalls that arise from common misconceptions about recovering incorrectly charged VAT At the end, you can visit useful Internet sites on a “Web Ride” Lecturer: Tim Buss Learning time: approx. 15 min How to use this learning module? - Click on "Help" in the Table of Contents (TOC) Recovering incorrectly charged VAT Graphic: [presenter or standard graphic]

4. VAT is frequently charged incorrectly Complex liabilities Disputes with HMRC Changes of interpretation Issues for exempt businesses and private persons How to recover VAT charged incorrectly Introduction Graphic: [a bottle of Tippex

5. VAT charged on exempt or zero rated transactions Standard rate VAT charged on reduced rate building conversions Incorrect treatment of transfers of businesses as going concerns Common areas Graphic: [building conversion work]

6. Belief that fully taxable businesses can recover incorrectly charged VAT as input tax HMRC’s view is that incorrectly charged VAT is not VAT and cannot be reclaimed from them HMRC modified view following the case of Investment Trust Companies (ITC) Misconception by purchasers Graphic: [road sign One way street]

7. Change in liability of management services - should have been exempt Management companies overpaid VAT HMRC reduced claims for output tax by input tax disallowed Management companies paid the net to ITC Court ruled ITC entitled to full amount of VAT paid European Court judgement ITC case Graphic: [European Court of Justice]

8. HMRC appealing decision to Court of Appeal Business Brief 15/13 Claims can be made Claims must be particularised Claims will be stood over by HMRC pending appeal Implications of ITC decision Graphic: [cricketer making the T sign that asks for decision review]

9. Supplier has charged an amount of VAT which should not have been charged The economic burden of the VAT has been passed to customer Owing to exceptional circumstances, customers are unable to get the VAT back from suppliers VAT wrongly levied in breach of EU law Direct claim to HMRC Circumstances for claims Graphic: [HMRC logo]

10. First step is to seek reimbursement from supplier Suppliers should seek reimbursement from HMRC HMRC normally repay to suppliers on condition suppliers reimburse customers Unjust enrichment law Customers have no recourse to direct repayment by HMRC except for ITC circumstances VAT recovery generally Graphic: [a bank note being pulled by a piece of nylon/ string]

11. Subject to conditions, transfers are outside the scope of VAT No output tax or input tax Difficulties in interpretation of rules leads to incorrect VAT charges HMRC will refuse purchasers’ input tax claims Concession under care and management of the revenue HMRC allow input tax where they are satisfied vendors have accounted for output tax Transfers of going concerns Graphic: [traffic light on green]

12. Supplier wrongly charges VAT to overseas customer UK reverse charge should have applied Decision of European Court involving supply by an Italian supplier to a German customer Court ruled principles of neutrality, effectiveness and non discrimination Allowed national legislation to reimburse VAT unduly paid International VAT Graphic: [a globe]

13. VAT overcharged on an invoice HMRC can take full amount from supplier Allow correct amount to be reclaimed by purchaser Correction by cancelling and reissuing invoice Credit or debit note No error notification required by either party Overcharged VAT Graphic: [a battery charger]

14. In limited circumstances direct claims can be made to HMRC ITC case subject to appeal Incorrectly charged VAT normally a matter between suppliers and customers Concession for transfers of going concerns VAT charged by overseas (EU) suppliers - direct claims Conclusion Graphic: [a supplier and a businesscustomer]

15. The key things to remember from this module are: ITC case has introduced concept of claiming incorrectly charged VAT direct from HMRC Limited circumstances - Business Brief15/13 VAT charged incorrectly by overseas (EU) suppliers - direct claim from authorities in country concerned Otherwise claim from supplier if VAT charged incorrectly Summary Graphic: [standard summary graphic]

16. Web Ride

17. …clear thinking

18. Please select the correct answer(s) and then click on “Submit” Which of the following statements is correct? VAT charged on an exempt supply can be claimed on a normal VAT return as input tax Where VAT has been overcharged, a supplier has to pay the full amount to HMRC Where VAT has been overcharged, the VAT charged can be claimed as input tax by purchaser VAT charged on a transfer of a going concern can be claimed as input tax in all circumstances Question 1

19. Please select the correct answer(s) and then click on “Submit” A Spanish supplier has charged Spanish VAT on a supply which should have been treated as outside the scope, what are the consequences for the UK customer? The VAT can be claimed on a UK VAT return The VAT can be claimed from supplier or from Spanish authorities if claim not possible The whole VAT inclusive amount is subject to the reverse charge procedure in the UK 4. The VAT is a real cost and cannot be claimed Question 2

20. Please select the correct answer(s) and then click on “Submit” In what circumstances will HMRC repay incorrectly charged VAT to a supplier? Supplier has borne the economic burden of the VAT charge Customer has borne the economic burden of the VAT charge Supplier agrees to repay the VAT claimed to purchaser Customer refuses to pay the VAT Question 3

21. Now you have finished this module and acquired basic knowledge on recovering incorrectly charged VAT If you answered all the questions in the Quiz correctly, you can print out your personal certificate by clicking on the link Thank you for your attention! Finish Graphic: [standard finish graphic]