Weekly VAT Update – 11 July 2017
Whether the provision of ambulance services are Zero-rated or exempt
This First Tier case concerned a trader, Jigsaw, which had submitted its VAT return for the period 10/15 which showed a repayment that HMRC duly settled. Shortly afterwards, Jigsaw informed HMRC that it had taken on a large contract with the NHS to provide ambulance services and had purchased a number of vehicles to supply these. When Jigsaw filed its VAT return for the period to 01/16, this showed a repayment claim of £101,000 which prompted a visit by HMRC to Jigsaw’s premises. On finding that Jigsaw had treated its services as zero-rated, HMRC issued an assessment on the grounds that they considered the services to be exempt.
At Tribunal it was accepted that the relevant law, if Jigsaw was successful with its claim, was Note 4D of Group 8, Sch 8, VATA, which deals with zero-rating and says:
Item 4(a) includes the transport of passengers in a vehicle –
(a) Which is designed, or substantially and permanently adapted, for the safe carriage of a person in a wheelchair or two or more such persons, and
(b) Which, if it were not so designed or adapted, would be capable of carrying no less than 10 persons.
However the relevant law if HMRC was successful with its exemption claim was Item 11 of Group 7 of Sch 9 VATA, which says:
The supply of transport services for sick or injured persons in vehicles specially designed for that purpose.
It was acknowledged by both parties that, in accordance with s30(1) of the Value Added Tax Act 1994, where a supply may be either exempt or taxable, the taxable rate takes precedence. In this case it means that, if the supply can be properly regarded as being both exempt and zero-rated, it is deemed to be zero-rated. The case therefore discussed whether the vehicles, if they were not adapted to the carrying of persons in a wheelchair, whether they would be capable of carrying not less than ten passengers. The evidence before the tribunal confirmed this. The services were therefore zero-rated and the appeal allowed. Earlier in proceedings it had been decided that persons in a wheelchair were also within the definition of passengers.
Letters from HMRC with regard to offshore sellers of goods in the UK via online platforms
On at least two previous occasions, we have mentioned HMRC’s campaign against offshore traders selling goods in the UK via online platforms. We have now seen the first letter from HMRC. It is a standard missive and may upset many recipients. It assumes that all online traders are fraudulent, and says that HMRC has reviewed the trader’s VAT returns, which is patently incorrect. It threatens that, if it does not receive a response within seven days – which asks for records going back a number of years – to write to the online platform and request that they cease dealing with the trader. If you or your clients receive such letters you need to take immediate specialist VAT advice.