Glyn Edwards AIIT

1. Glyn Edwards AIIT VAT Consultant

2. Question: What makes lap-dancing clubs interesting? Answer: VAT!!!!! 2

3. The Tri-Partite Relationship Door fee & bar The Club Customers Cash for Chips Chips for Cash Licence Payment Chips or cash for dances/ ‘sit-downs’ Dancers 3

4. ‘Services to the Salon’ Structure Supply (say £100k p.a.) Hair Salon Customer Subcontract or employee (say £50k) Lost VAT £14k Stylist 4

5. ‘Services to the Customer’ Structure Hair Salon Customer Chair Rent/Use of Facilities (£50k) Supply (£50k) Stylists 5

6. Taxi Firm as Principal Supply (say £100k p.a.) Taxi Firm Customer Subcontract or employee (say £50k) Lost VAT £14k Taxi Driver 6

7. The Taxi Firm as Agent Taxi Firm Customer Radio Rental & Commission (£50k) Supply (£50k) Driver 7

8. The Taxi Firm as Agent & Principal Account Taxi Firm Business Customers Radio Rental & Commission (£50k) Driving Services Private Customers Cash Driver 8

9. Agency is most effective when….. • Customers are unable to reclaim VAT • Contractors are operating below Registration threshold BUT – Customs hate any VAT-saving device and regard agency as a risk to the revenue 9

10. Agency – Getting It Right • Always have written agreements • The principal must be know the value of their supply and the amount of any commission • Negotiation – this is key in the Spearmint Rhino decision • Control – the principal must be able to control his business as far as possible 10

11. Other Examples of Agency • Staff agencies – where customer cannot claim VAT e.g. health, banking • Massage parlours • Education – to benefit from the exemption for individual teachers 11

12. Medical Staff Alert for medical staff agencies ….Supplying staff as principal 12

13. Typical Arrangements Invoice incl m/up Staff Agency Hospital/Care Home Invoice Self-employed Doctor/Nurse/Auxillary • Past treatment: VAT exempt either as: • Services of a medical practitioner/registered nurse • Care in an approved institution 13

14. Is It Right? Invoice incl m/up Staff Agency New housebuilder Invoice Instruction & Control Self-employed Bricklayer The supply from the agency to the new house builder is a supply of staff: VATable irrespective of the what work the bricklayer performs 14

15. What Has Changed? University of Glasgow Invoice incl m/up NHS trusts Instruction & Control Consultants (Medical Lecturers) Tribunal found that this was a taxable supply of staff!! 15

16. The “Misdirection” Concession If a Customs and Excise officer, with the full facts before him, has given a clear and unequivocal ruling on VAT in writing or, knowing the full facts, has misled a registered person to his detriment, any assessment of VAT due will be based on the correct ruling from the date the error was brought to the registered person's attention. 16

17. The “Misunderstanding” Concession VAT undercharged by a registered trader on account of a bona fide misunderstanding may be remitted provided (a) the tax has not been knowingly evaded; (b) there is no evidence of negligence; (c) the misunderstanding does not concern an aspect of the tax clearly covered in the guidance published by Customs and (d) the tax due was not charged, could not now be expected to be charged to customers, and will not be charged. 17