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The Irish Accounting & Tax Summit
Session 12 - Key VAT Issues Including COVID-19 Measures
Session 12 - Presentation
This transcript was created using AI and may contain some mistakes.
<inaudible> Gabrielle Dylan charter tax advisor. She’s a director of Tony Moore taxation from she’s a former director of Ryan associates. And in March, 2020, she she’s, you know, she’s a regular author of tax review is a member of texts and she’s lectured frequently in other professional bodies. She’s coauthored Institute publication, cyber attacks on VAT on properly. Um, so today government is going to discuss the various COVID-19 wrap measures,
property issues for you, updates e-commerce fat groups. Fat is obviously a key area. You know, you can’t divide it in any, in any accounts you practice. I always find a Gabrielle sessions are very insightful and I teach up to date on the latest changes in the background, which we know can be regular. And so I’ll hand it over to you and thank you very much,
John. Good afternoon, everybody. I’m just going to share my screen now. So you all see the slides. Okay, good afternoon. Um, as John said there and going to cover a couple of different items, um, this afternoon, just specifically in relation to VAT, you’ll notice there that we need the first two bullet points, I suppose,
will be very much driven by the COVID-19, um, pandemic. And some of the VAT measures that revenue introduced over the last couple of weeks and months. Um, and equally then I think it will be relevant perhaps to just highlight some potential issues for landlords that might find themselves in, um, some difficulties perhaps where, um, you know, their tenants businesses of,
um, are not reopening and perhaps their tenants are going to surrender nieces. So just to again, highlight some of the issues that might arise for landlords and different, um, issues that they should be aware of. And then finally just touch on, um, some of the quick fixes that were introduced with the fact from January, 2020, and then there were also some changes in,
in relation to eCommerce, um, with the fact from January, 2021. Um, however it, because of the COVID-19 pandemic again, across across the world and the EU have postponed the effective date of introduction of some of the e-commerce measures onto the 1st of July, 2021. But again, I think it’s useful to highlight some of these changes that are coming down the tracks, because some of them,
you may find that your clients might need to upgrade their software or their systems, or become familiar with the information that is coming in. So it says what to be aware of the earliest possible opportunity. And then I just touched very briefly on fat groups. Our revenue had published an update to their TDM earlier in March this year. So it’s just one,
um, reviewing What fat groups are all about and I suppose what the advantages and perhaps disadvantages might be for them. Okay. So just starting off with our covert 19 VAT measures, um, I suppose with two really main issues here, that revenue covert, um, and I also then touch on the whole dish warehousing issue as well from that point of view,
but from, I suppose about Reed point of view, um, as you are aware under schedule two, the required number of supplies of goods and services that already qualifying for the zero rate of VAT. And under that change, you will certain medical equipment and or medicines already qualify for the zero rate, um, revenue, then introduce some concessionary treatment, um,
to deal with the pandemic on the 9th of April. And those measures will run onto so far anyway, the 31st of July, 2020, and what that concession it really relates to is the application of the zero race to certain goods where those goods are used specifically for the delivery of healthcare services related to COVID-19. So that’s a very important part of the, the concession. So items like PPE gear,
thermometers, hand, sanitizes, oxygen, all those things, we’ve now become all very familiar with, uh, no longer new terminology for us and medical ventilators and specialist respiratory equipment. So they will all qualify for the zero rate. However, the suppose the two week conditions to that zero rating. Number one, as I said, it has to be used for the delivery of healthcare services related to COVID-19.
And it also only applies where the supplies of the goods are actually made to the HSC a hospital, a nursing home or other care homes are directly to, to GPS. So they just want to make sure that obviously the correct entities are qualifying for the zero ratio. If it is a situation in the supply chain where those supplies are actually going to other operators who are then going to sell ’em to the hospital or the HSE,
for example, and then those instances that first supply won’t qualify for the concessionary zero ration States, the normal vast range of 23% will apply. Um, an important point to, as opposed to bear in mind is that, you know, as always with VAT, it’s the supplier who determines the about treatment and equally determines the correct rate of VAT. So if you are applying a concession for the zero rate,
then you must be able to satisfy yourself that the recipients of your supplies would actually qualify for the zero. It’s just to be able to identify who your customers are, I suppose, in conjunction with that, then you also have a requirement to have very clear invoice descriptions, and you know, that look and just be in relation to this, um, VAT measure.
It would apply across the board clearly when you’re looking at fat recovery, um, that’s all very much dependent on having a valid VAT invoice. And part of that will be to describe the goods and services quite clearly. So here in this instance, again, in order to get the zero rate, clearly identify what the PPE gear is or what type of thermometers are,
are, are the ventilators, et cetera, because the supplier is engaged in, um, zero rated supplies. This then won’t have an impact on their input VAT recovery, because zero rating is actually still a textbook supply from a point of view, it would be different if, for example, the concession applied an exemption to these types of supplies. Then you would have a difficulty with your input fat recovery,
but not in this scenario. As I said, your, your zero rated supplies are all textbooks supplies. The secondary then the revenue looked at was I suppose, the whole question of the provision of emergency accommodation, um, again, to, to help combat the COVID-19 pandemic. Um, in, in the first instance for a quite a number of years,
we have had exemption in relation to emergency accommodation, and that would apply where you have accommodation and a hotel or a guest house, or that property is contracted over to a state agency for specific purposes. And I suppose historically is, would have always applied in the case of, for example, asylum seekers that, um, emergency accommodation was provided in those instances.
And the letting of that accommodation was treated as being exempt from VAT as both one of the criteria to bear in mind, there is that where you are providing the emergency accommodation that is not actually available for netting to anybody, um, in the public arena. It’s only specifically for the particular use that it’s given over to the state agency. So that was treated all of us as an exempt letting.
And in those scenarios, you always had obviously the supply of certain additional elements, not just the property itself, but also some insidery supplies like reception services or security services. For example, they also would have fallen within the exemption from VAT. However, um, there was always a provision, um, whereby any kind of catering services provide us in conjunction with the emergency accommodation was not treated as incinerate.
That was a completely separate supply of services. And that those instances that will be a textbook supply. So if you had a supplier who was engaged in catering services, and also this exempt letting of emergency accommodation, if they exceed the registration threshold for services, then they’d be obliged to account for VAT on vacationing services. So to bring this forward, then in relation to the COVID-19 measures,
the revenue broadened out the exemption, which applied to emergency accommodation specifically where that accommodation was provided to the<inaudible> or to the state or other state agencies. Again, here, we have a number of conditions to substance, like number one, it has to be used to combat COVID-19. Um, and secondly can only be provided to the HSE or state agency as appropriate,
of course, as you’re familiar with, um, you know, when you’re making supplies from that point of view, as soon as you mentioned exemption, then obviously you’re thinking about what, what are the implications from an impact input recovery point of view? Um, so clearly where you have somebody who’s an owner of a property, um, and they diverted to an exempt use that may have implications onto the capture of good scheme for the thought that they have retained.
However, in conjunction with the broadening out of the emergency accommodation exemption revenue also introduced to some concessions around the capture, good scheme, again, to ensure that there’s no negative effect for the suppliers of such accommodation. So in this instance, they, um, ensured that the big swing adjustment is not applicable, and that would apply where, for example, you divert a property to more than 50% taxable or exempt use in a particular interval.
So the way that has done that is they’ve set aside to the biggest thing ruins in relation to emergency accommodation. Obviously then the question raises is whether the normal capital scheme rooms would apply. If you don’t have a big swing adjustment than shorty, would I not have a negative adjustment? And in this instance, their guidance, um, would indicate that the SNR optical scheme wounds would apply,
but no negative adjustments should arise because the deductible use in the particular interference that you use, the emergency combination for is actually not based on your actual use, which obviously will be exempt for VAT on your prior use. So if you had a property that was fully taxable in the prior interval, then that’s the basis on which you can apply your deductible use.
So in those instances, then you don’t have a negative adjustment horizon. Okay. So then the final one, I suppose. Yeah. They presume, like, if let’s say this goes on for two months or three months, and let’s say you did put it for a separate juice, you know, there’s a break and let’s say some use and as an exam,
it’s not necessarily a rate that I know you said you looked at the previous interval. What I presume that’s just kind of just taking it too far. I suppose it’s on an interval by interval basis. So if, for example, it goes on past the interval, then there’s also then a guidance in the notes as well from revenue, which would indicate that again,
you’re still using the prior prior use. So it’s, it’s done in such a way that you’re not looking at the actual use in a particular interval, but instead you can look at your prior use, which in most instances would be a hundred percent taxable depending on the nature of the particular property involved. So really here, I think what they’re trying to achieve is that there is no negative impact from an input fat recovery point of view on somebody’s diverting the property to emergency accommodation.
Um, so then just, I suppose to look at the, the whole debt warehousing, um, guidance stuff, revenue of, um, published, um, and I suppose this equally applies to VAT as adults to all of the other tax heads, um, all the other direct taxes. So I suppose the whole purpose behind the dash warehousing is to make sure that I suppose there aren’t measures for debt collection put in place while people are in restricted trading conditions or the businesses have chose to because of fundament and that there would be no charging of interest on late payments.
Those particular areas have been suspended for a period of time. So originally when the guidance came out, the, um, debt collection charge of interest with suspended in relation to your January, February, March, April VAT periods for this year, but more recently that now has extended out to may June, 2020. So the key here really will be that, you know,
that people would still be required to actually submit their VAT returns. It would be at the may not actually be in a position to pay the liability. And I suppose the reason why revenue wants the returns find is so that they have a good idea as to what liability is building up for the taxpayer, but also for the Exchequer, so that the know exactly potentially what funds might be coming in in a number of months,
time be able to include us in their budgets. Equally, you might come across a situation where perhaps your client is not in a position to complete a return. Perhaps, you know, the staff are not available. They haven’t been in the office for a period of time to collate all of the exact figures. So in that instance, revenue was lucky to find the return and do it on the best estimate of your liability at that particular point in time.
Um, the whole question, as well as all of the automatic deferment of the payments is split in two, number one, you have your SME type businesses who would get an automatic deferment of the payments. Whereas if you’re a large business who are dealt with, by a NCD or the med divisions of revenue, then you don’t qualify for the automatic deferment,
but then obviously you come across situations where some large businesses are in financial difficulty because of the, the trading conditions so that they can make a request to the collector General’s office to see if they can have their payments deferred in those particular circumstances. And just there, the final point is that an SME is defined as an entity, which has a turnover of less than 3 million,
and there’s enough stuff that by large cases, division or the med divisions of revenue. So when we’re looking at the warehousing, then we’re looking at revenue, also warehousing particular text debts, and unpaid VAT would be one of those. And again, this is only in relation to those own pay debts, which arise because of COVID-19 not for any other particular reasons,
but specifically because of trading difficulties that are isn’t because of COVID-19. So the plan is that those debts will be warehouse for a 12 month period until such time as your business, ms. Newman’s resume is trading. What would happen here is that you will have a low interest rate only at 3% applying after the 12 month period kicks in. So after the businesses resume trading an additional 12 month periods,
the, your tax clearance position is not going to be effective if you do avail of the debt warehousing. So that that’s very helpful as well for businesses because Carrie, when you are trading and you are supplying to particular agencies, you need to have a tax Karen certificate in order to be able to provide those services and receive payments. So that will be important to the tax Karen’s isn’t impacted on your VA team reforms.
If you have fund five returns with the refund on those, then those will still be repaid by revenue. Of course, there is obviously the option there to offset any of your liabilities against the refund. So that might be helpful way of perhaps, um, you know, minimizing the liabilities down the line. Then again, I suppose people may also want to make sure that they get their VAT refund as well,
um, from perhaps a cashflow point of view. So I suppose all of the guidance in relation to the desk, warehousing is all being carried out on an administration basis at the moment by revenue. And they are looking at bringing out legislation. So that is to issue in due course. So just very quickly then looking at, I suppose, how does the debt warehousing work?
And they’ve introduced three different time periods under the particular scheme. Um, and they will be in relation to, I suppose, period wounds where you have a very restricted trading phase because of COVID-19. So in that particular period, your debts or ring fenced, um, and that’s specifically where you’re either on able to trade or you’re restricted from trading close a two month period after you come back into business.
So in that particular period, the debt’s not going to be collected and you’re not going to be charged any interest. The key point though, being is distant, find your returns. And again, if you’re only having to estimate and find the return and you’ll be required to submit a corrected return before the end of period one. So that would be important to make sure that the correct amount of the debt has been has been warehoused period two then is what’s referred to as your zero interest phase.
And this would apply from the, from the end of period, one for a period of 12 months. So during that period of time, you’re not going to be charged any interest in relation to the tax liability started from warehouse, however, you would be required to pay your current tax liabilities. And then the final period is the reduced interest phase. And again,
this will apply from the end of period two a year after a 12 month period until your period one debts are all paid on the interest rate, which would apply. There is only 3% as opposed to the normal 10% that actually applies. So I suppose in summary, there are quite a lot of helpful measures that revenue have given guidance on that should help people,
particularly from a bank point of view, hopefully get through some of the more difficult periods of, of trading, um, for their business, perhaps close down or they’re restricted trading because of the COVID-19 pandemic, I suppose, as a secondary then, which is linked to COVID-19. And it’s something that you might come across for clients in the near future, or you may already have done so already.
And this is really where perhaps you’re acting for, um, a landlord cutie, you might have, uh, landlords with the whole portfolio of properties, or you might just have a landlord with, um, one single letting. And in those instances, I suppose to do need to bear in mind what any VAT implications might arise for them. And in the case where perhaps the tenant goes out of business and this rent or lease,
what kind of costs might arise for a landlord on those particular circumstances. So here from the landlord’s point of view, it’s always important to determine what type of the lease is in place with the tenant. So is it at least, which is referred to as that legacy lease? I would just created prior to July, 2008, or is it a lease that was created after one,
July, 2008? And the treatment of both is very different as you know. So for example, if we take the situation where the landlord has granted a long lease prior to one July Oh eight, um, and that is going to be surrendered, or perhaps a tenant is happy to assign us to another business within 20 years of at least having been creators then for our purposes,
thus treated as a supply of goods. If the tenant had that recovery, when he acquired the lease, then it will be treated as a vegetable supply. However, if the tenant happens to be in a position of being engaged in fully exempt activities, then it will be an exempt supply. They had no input that recovery, but you may find a situation where a joint option to tax will be useful in those circumstances where the work,
perhaps the VAT on development works, carried out, which might enable some employment recovery. So in the instance, then what you’re looking at a vegetable surrender or assignment, then there’s a formula in the legislation to calculate what the<inaudible> is the point here being though, is that if there is bought on the surrender, then it’s the landlord’s responsibility to account for the VAT on a reverse charge basis.
Equally, if it’s an assignment type situation, then it would be the assignee that would be doing for self accounting for VAT. Um, but it would be important here is that the person making the disposal at the surrender of the assignment would issue a document to the landlord or to the assignee specifying the number of intervals are remaining in the lease and the amount of VAT that’s remaining from a capital good skin point of view,
as, as sometimes that might be difficult if perhaps the, you know, the tenants has gone out of business and is no longer contactable or whatever. Um, then I would imagine that the landlord would have, um, hopefully some of the information when he created the lease. In the first instances, I still thought the potential thought cost for him would be so take the situation then where you have taken a surrender of the lease.
That’s really important then is what to do next because in order for the landlord to have an entitlement, imperfect recovery on that surrender, they need to do something taxable with the property as a next step. So your entitlements devote recovery and surrender is very much dependent on what you do for the future use. You put the property too. So say for example,
you, um, follow up with the sale of the property and there are a number of different scenarios here we could look at. So obviously if you have a situation where you’re selling to a non-accountable person and you’re just you’re selling your freehold interest, but it’s still subject to the legacy lease. In other words, that lease hasn’t yet been surrendered. Then what we would have here would be the sale of a regression reinterest,
which would not be liable to VAT. Um, this is quite specific though, to the condition that would only apply with the property has not been developed by or on behalf or to the benefits of the landlord since the creation of the long lease. Okay. So this provision under section 93, two only comes into play where the legacy list is still in place at the time of sale.
If it has been developed since the creation of the legacy lease, um, then you’re knocking out your normal VAT wounds when applying those particular circumstance, Sorry, minor development there, sorry. One of the have minor development say less than whatever the 25% test, but there was development, but wasn’t Yeah, actually the whole question of, I suppose, development there and the question of the 25%,
um, would come into play if the property, so say for example, it doesn’t qualify for 93 to treatment. So it would potentially, then you look at also under section 94, two, which is the section that sets out the five exemptions that apply. So within that, if the property has been developed more than five years prior to the sale,
then the sale would still be exempt from VAT, but that can have an implications for the center in that instance where perhaps they have renamed VAT and the bite of a clawback arising on an exempt sale. If for example, the development has occurred within five years prior to the sale, then it will be a batchable sale. Um, in those particular instances,
if you come within the five years, then the 25% isn’t really relevant, that only becomes relevant. If, for example, you’re looking at a further exemption under section 94, two, where, and the, the work has either been for change in the material use of the property, or there’s been an expenditure of greater than 25%. Then in those circumstances,
it could still be available sending those particular instances. So what’s always important from a landlord’s point of view. And also from a tenant’s point of view, Kennedy is when work is carried out, what actually is the nature of that work? Does it just simply something which might be considered to be repairs, which is not development from our purposes? Or is it something more than that where you have some physical alterations to the building?
So again, you go back to look at your definition of what is development, that being your alteration, reconstruction, construction extension, and an alteration of a building, um, on the law or any kind of engineering works carried out on, on the land. So you always go back to see what is the nature of the work that was actually carried out.
And then what you look at is the quantum of the works, because you could have spent maybe a hundred thousand on work on a property. Part of that, a hundred thousand, perhaps only 50,000 relates to actual development work. And the other 50,000 perhaps is in relation to buying fixtures and fishing’s or equipment or repairs. So it’s always very important to keep good records as to the type of work that’s been carried out.
And the quantum related to that particular work. Yeah. Let’s say that the, um, the tenant has done, let’s say micro developments or they have a 10 year, or let’s say CGS, uh Inderal and a dentist surrendered. So effectively. Yeah. I got to come to that as early as next year. Yeah. That’s just one of the key points.
Absolutely. John. Yep. And so Sydney, for example, then we move on to a scenario where they’re go to sell the property and it’s again, our disposal of our, but we still have our legacy lease in place. And this situation, we’re not looking at 93 too, because we’re selling to about registered person. So, um, this will be treated as the sale of a letting business in these particular circumstances.
So it will be covered by transport business relief under section 22 C even though it’s covered by TOB, there are no CGS obligations per se, passing over to the purchaser at that stage because we already have a legacy lease in place in the property. And that’s where the vast interest actually lies is in that legacy lease. It’s only for example, where the tenant subsequent to the purchase or to the sale surrenders,
at least to the new purchaser that’s then when the VAT implications would arise for the new purchaser in those particular circumstances. So rather than I suppose, having a very detailed capture, good scheme record passing, and those particular cases, you may simply just have perhaps a copy of the buck four 80 or something like that, which issued in relation to the grant of the least in the first instance.
So the new purchaser is aware of what the potential that liabilities could be down the line if the tenant decides to surrender the lease. So then take for, if we go back a step, then, then we assume, okay, the legacy lease has been surrendered. Um, we’re now not looking at 93 too, so it’s no longer the dispose of upper reversionary interest.
It’s a simply a sale of the freehold and the property. So here you have to bear my two things, obviously the bad treatment of the surrender, which is what we’ve looked at earlier and also then the bath treatment of the subsequent sale. And as I said, you always do have to be careful when you’re looking at surrenders, because you want to ensure that Nova Costa rises for you on the surrender.
And that, as I said, all was very much dictated by what you do with the property afterwards. So if the sale is exempt, then the landlord has no recovery on the surrender, those particular circumstances, if wherever the sale as possible, then there’s no issue with the VAT on the surrender. It’s quite straightforward. They self account for that in there about return on a refresh charge basis equally.
Then if you have this render Villegas lease and you, the landlord decides he’s going to maybe let the property further than now, as you’re aware, all of those lessons will be exempt from VAT, which now triggers up costs potentially on the surrender forest. However, the landlord does obviously have the option to exercise an option to tax in particular letting, and he can do that on a letting,
by letting basis. One important point here though, is that you might come across the situation where you have a landlord who has a whole range of properties in his portfolio. And he may still have a waiver of exemption in relation to some of the lettings that he was engaged in previously. And that, that waiver of assumption continues in place. If you granted letting onto the current rooms,
following a surrender of a legacy lease post one, July, 2008, then your waiver exemption does not extend to that. Letting if you want to ensure that recovery, you must be putting in an option to tax you can’t rely on your waiver of exemption for that particular letting in those circumstances. So again, it’s just one of those to watch out for. And the reason for that is because you’re acquiring your interest.
I E the surrendered interest after one, July, 2008, so a waiver doesn’t apply to a property that interest that was acquired after one, July, 2008. So that’s the reason for that particular issue. So then when we’re looking at it, I suppose, then the situation where your landlord has created new leases after one, July, 2008, and the tenant wants to surrender, or,
you know, for if it’s police or simply abandoned lease, all of those issues are treated as a Surendra for fire purposes. However, because we’re not looking at a legacy lease in these particular situations, then the ruse that I mentioned earlier for surrenders and assignments don’t apply. So simply there’s no Vata counting to be done by the landlord in the case where you’re surrendering at least created post one July,
um, in some scenarios. And it possibly wouldn’t apply in this current circumstances where you perhaps maybe have a business which has ceased trading, but in any event, just if there are any kind of premium payable by a tenant, um, in relation to the surrender of, of a new lease, then the VAT treatment or those particular payments will all depend on the status of the lease.
Is it an after tax lease or is it simply an exempted lighting? So where does an option to tax? Then I need a payments associated with the lease will be liable to be a T there’s no option to tax. Then simply those payments would not be liable to that. So in a situation where the landlord then takes a surrender of, um, uh,
a new lease, shall we call us and he then decides he’s going to create new lettings. Then it will be obviously wise for him to consider Potter his CGS obligations in relation to the particular property that he owns, because that will determine whether he needs to up to tax the next lease or not. So again, there’s a little depend on when he actually acquired the property.
And most likely if they’re, I suppose, acquisitions that have occurred post 2000 donate, um, you know, in some instances the vast life might have nearly expired by now, um, or the may wish to, you know, carry out some work on the properties that they might want to continue an option to tax. So where you have, um,
I suppose, a surrender of a new lease that is not the termination of an option to tax for a landlord. That could be a different situation where right, which arises, um, and that has different VAT implications arising for a landlord. So where you have a situation where the lease is still in place and the landlord terminates the option to text to text,
then that creates, um, potential issues for the landlord in those circumstances, because he could suffer a club that could be 80. Whereas if the tenants are renders, the lease that than the option to tax is coming to an end in that particular scenario. And then the landlord needs to be cognizant of whatever that life is remaining to make sure he doesn’t trigger any negative adjustments for himself.
Why not opt into tax, any sorts of quantities. So then I suppose just a couple of little issues, then we’re looking at, um, landlords, would we be dilapidation payments? You might come across a situation where there are provisions in the lease for dilapidation works to be carried out with lease has been surrendered, or that the tenant would make a payments to the landlord in lieu of carrying out those works.
So from a revenue point of view, those dilapidation payments are generally not treated as consideration for us supply. Um, but again, you’d need to look at it carefully as to what are the terms of the lease quality? What is the nature of the payment that’s actually been made to ensure that this is not actually seen as a supply of services, which could make it light,
but to be 80 or 23%. And just a point there that John mentioned was in relation to tenant refurbishments. So where you have a new lease in place and attendant has carried over, works on that property and has retained VAT in respect of those works about tenant surrenders, the lease within 10 years of that work, having been carried out that will actually trigger a clawback of VAT for that tenant,
because they’re no longer using the, um, I suppose the property for a vaginal been use for the full 10 years. So they wouldn’t be required to pay back some of the flat revenue. However, that club that can be avoided is where the landlord is agreeable to taking on whatever CGS obligations are associated with. Those works that the tenant carried out. And again,
you know, the landlord would, you don’t need to consider his position carefully before he confirmed. He would take over the CGS obligations because that might tie his hand as regards to what he can do subsequently with the property. So for example, you might have a situation where the landlord no longer has a interest in the property. Um, and if he now inherits the CGS obligations of the tenant,
that means he may have to up to text the next letting. Whereas if he doesn’t take over those CGS obligations and there’s no more life left to the property, then it may be worth us, um, you know, entering into exempt lettings in those particular situations and not inheriting the CGS obligations. So again, it’s just one to bear in mind where a tenant approaches the landlords and say,
you know, will you, will you take over the CGS now, clearly that might be something that happens outside of the lease terms. You know, you might’ve at least where it was simply just an option to type skills and about laws, but there was no specific requirements that the non or degreed at the grunt of the least to take over the obligations.
So it might be a question that arises later on and just, I got rehab that’s that 10 year chain doesn’t come into, but they would legacy leases then because that’s already Exactly. Yeah. This is only specific to any Lisa’s creation who posts one July, 2008, because the works and all of the other issues are dealt with in the surrender of the vital interest back to the landlord and that they’ll circle.
Yeah. And they are looking at a 25% test. Yeah. Yep. So then that’s what the final point then is in relation to us, but generally in relation to clinical scheme records, um, and wouldn’t, we just be for, for landlords is, would also be for owners of property. You know, now might be the time to have a look at first year optical scanning records or like,
or if you do have records at all, it might be not worthwhile, you know, start to, to look at the position. Do I need to create a record and maintain records? Um, because if you have, um, a scenario where in the future, the landlord may want to sell the property or an owner wants to sell the property.
And that was the time to get your information into order, um, a cure. You have all the information you required to complete the CGS record, um, because you know, it is a document that does need to be passed over either on a TOB cell or, um, in the case of a surrender of a legacy lease, um, or in the case of the sale of the property,
you would need to handle the CGS record. And don’t forget that there is a penalty in the legislation for not, uh, creating and maintaining a capsicum scheme record of 4,000 euros. So, um, it’s just want to bear in mind. Also, if you have somebody who’s in a situation where they’re trying to sell their property quickly, um, not having all of that information to hand can slow things down considerably,
and you’re trying to find out what kind of historic information do I have to create a capital scheme record. So, you know, as opposed to when businesses are less busy, perhaps at the moment, I know VAT is public. One of the last things they want to be thinking about, and certainly critical skin records is not one of them, but,
you know, it might be time for you to review the property for four years and make sure that they have the information that they might need in the instance that they’re going to send on the property. I think that 4k who would worry a lot of people I’d say Absolutely. Yeah, yeah. At the moment, you know, and you know, sometimes people forget that it’s there,
but it certainly isn’t the legislation to date. I haven’t come across a situation in practice where it’s been imposed. Um, you know, the, the new rules are with us now since 2000 donation, that’s a long time. So, you know, at this stage, it’s kind of no excuse for not having, uh, compliant with the legislation as regards to the type of information and books and records that you need to maintain.
Okay. So moving away as close from everything COVID-19 relationship, um, just look at some of the EU updates that have happened over the last little while. Um, and these, you may have come across in the press and the media in relation to, for quick fixes that became effective in the 1st of January this year. Um, unbaked in 2018, the European council brought out some regulations and directives,
um, to adjust it a lot of the VAT rules. Uh, I suppose a lot of the driver for some of these will be clearly, they’re trying to introduce a new VAT system slowly but surely. Um, and there were certain areas, um, in the back system that were causing difficulties, uh, particularly you will see from a lot of the European court justice cases,
that there are similar issues cropping up all of the time in relation to VAT and cross-border type supplies like invoicing, like documentation that you need to have to support the view that the glimpse of active left your all member, state, um, questions about the content of a VAT invoice is what are the substantial informer requirements in order to ensure that you comply with the zero reading requirements?
So there’s been a whole raft of cases over the last number of years, kind of with similar issues. Um, so I think they’ve introduced some of the quick fixes to certainly maybe try and bring across some uniformity throughout the member States to the same type of documentary requirements that should be available. And they’ve also introduced in some ruins in relation to call off stocks,
consignment stocks, and, um, Potter referred to as chain supplies. So I just got through each of those briefly. So the first one is in relation to Colloff stock relief, and this all relates to really the whole movement of goods cross border, where you have a supplier in one member state, and he’s moving goods to a warehouse B a third party warehouse,
or warehouse of a purchaser in another EU member state. And those, the, the retention of the goods and that warehouse allows the purchaser to draw down the goats whenever they’re actually required, but they’re going to sell them on, are going to use them themselves. And I suppose there has been differing interpretations across the EU member States as to what is called livestock.
What are the documentary requirements around as Washington record keeping around us? What are the VAT registration requirements, perhaps in some member States and not another spot kind of simplification supply, so that they’ve no really tried to make sure that the rooms are harmonized across the EU so that every, um, supplier, I suppose knows what needs to be done in the case of the movement of goats cross border.
So, um, what we’re looking at here, as I mentioned is movement of the goods from one member States into a warehouse in another location. And these instances in order for a call us doc relief to apply, it would be important that the purchaser’s identity is known before the goods are moved. Um, and what happens here is that the ownership of the goods only transferred when the goods are called off by the particular purchaser.
So the transfer of the goods to the warehouse, doesn’t actually trigger a transfer of ownership from our purposes. That ownership is only triggered when the goods are called off in the other particular member station. So if the didn’t allow you to use this call up stock release, then what would happen would be the supplier will be required to register it in the other EU member state they’d have to account for an Intercommunity acquisition of gods because the goods have moved to a country where the transport doesn’t just,
they’d be the one treated as having required to go to that member stage. And then they would end up having to charge domestic VAT to the purchaser and the other member state. So that can be a lot of compliance around moving goods, obviously across the EU. So to try and alleviate some of that admin, they introduced the call livestock relief. So what happens really here basically is that the purchaser would be the one that counted for VAT and the reverse charge basis whenever they call off the goods.
So it minimizes the compliance work for the supplier. The relief now is going to be applied across all the EU member States. It is, I suppose, treated pretty much as a simplification, but there are very strict conditions attached. And, you know, I think some of them might be problematic in the future, but it will, I suppose to see how things pan out as all of these things happen in practice.
So the conditions that are important to bear in mind, number one, the supplier must know the identity of the purchaser. That’s really key. The time numbers involved is that you can hold the goods and the other member stays in that warehouse for up to a year. So wherever the goats have moved to the can stay in that warehouse for up to a year prior to triggering any VAT accounting obligations,
some strict record keeping though from the supplier’s point of view and is that they need to keep a supply, a record, sorry, of all the suppliers that are using the call off stock relief. So that will be separate records to their normal type supplies that they might be making. They also then need to complete a visa return when the transport actually takes place.
So within that, then they obviously need to have the VAT number of the purchaser. And that’s why the identity of the participant is so crucial to the use of the relief. Both parties must be VAT registered. So this counter apply in a situation where the purchaser might be a non, but registered or non textbook person. Both parties must be VAT registered because in order for the relief to apply,
it’s the purchaser. As I said, that does the self accounting for VAT and their member States. And we’ll key point here will be that the supplier cannot be established in the destination EU member state. It doesn’t seem to be a problem if the supplier is registered in the health of member States, but the company established in that other member state. So then the second,
um, quick fix that was introduced was in relation to the whole idea of the VAT number that needs to be included on a valid VAT invoice. And as you know, when a supplier, um, is, uh, is entitled to zero rate supplies of goods, which leave their member States and go to another EU member state to about registered person, they zero rate that supplying.
But that zero rating is very much conditional of the fact that you have the customer’s phone number. It’s applied to the vendor. They quoted on the invoice and the retainers as part of their books and records. And then secondly, that they also keep proof that the goods have actually left the wrong particular member States. So there are the two key conditions. And for the last number of years through the European court of justice,
again, a number of cases have come through in relation to, I suppose, arguments from various tax authorities that certain suppliers don’t qualify for the zero rating and to date the, um, I suppose, requirements for a number was not a substantive condition. So you would see, um, through some of the case law that they look at both formal conditions and substantive conditions.
So your substantive conditions will be, um, that the goods have moved from the member state that you have evidence of the transport. Um, but having the VAT number is simply a formal requirement under the directive. So if that was absent, the tax authorities, Clinton’s, uh, not allow you to use the zero rate. Clearly all of those kinds of things will be set aside though,
in cases where they can show that there was a fraud or tax evasion or whatever happening, but in your normal type arrangements, um, it would have been seen just as a failure of a former condition. So obviously, probably because of the raft of cases that have come before the courts they’ve changed. Now the requirements so that having a button number is now a substantive condition for zero rating.
So curity, um, if you satisfy all of the substantive conditions, um, and it’s very much a born a Phoenix situation, then they did allow the zero rating to apply. However, now, under the new rules most obtain the back number and you must be able to validate it as a substantive condition. And as you know, you can use the EU commission website to validate a vast numbers of other EU member States to make sure it does.
It is a valid number that you have been given, and that will be important as well. Keeping a record of the printer that you get from the European commission website to show that you’ve found the data at the back numbers in particular point in time and equally, then what they’ve also introduced is not, um, finding a correct fees. Return is also substantive condition.
So if any of those items are now absent, then you’d be obliged to actually charge VAT as opposed to qualifying for the zero rate. Sorry, I’m just on the VAT number under, like how often would you have to recheck that? Do you take on direct cars? Like, let’s say you’re dealing with it Okay. When you were making the supply,
um, and you’re basing your zero rating on that, but then check it at that, at that particular time. Um, and I suppose, you know, that’s all a part of, I suppose, knowing who your customer is at the same time, so that all feeds into the requirements to know exactly who your customer is, who you’re dealing with,
um, and, you know, Take the issue of a copy. Then it will be a good idea to check the back number, um, on a regular basis. Yeah. To cover yourself, you should be printing off the checks. Yeah. So for example, when you key in the back number, then you get a little note back on the bedside to say that this is valid,
that number. Now, it obviously doesn’t give you specific details as to who has the back number. It just validates us to tell you that it is valid. So I would always print off a copy of that and keep that as part of your books and records, whether you’re doing it for your visa returns or your VAT invoicing, and just keep that,
um, as evidence that you have checked, because otherwise the supplier then is effectively the one on the hook for the VAT. They would have to try and charge in the absence of the zero rating. Yep. All right. So just one of the thing that the previous legs you talked about established, it might be good just to refresh just a quick refresher on what established means from a VAT perspective.
And you know, when you’re doing that, That’s a good question, actually. Um, and I suppose for a long number of years prior to certainly 2010, there was a definition in both the Irish legislation and the directive as to what an establishment was for our purposes. Um, but with the new place of supply rules, come in in 2010, they actually took away the definition for establishment from the legislation and rely very much on the presidents published by the European courts of justice.
So from that point of view, when you’re talking about having an establishment, what they require is that the person would have, or the company would have the human and technical resources required to enable them to make their supplies. Um, critically from a VAT point of view, establishment is more of an issue when you’re looking at supplies of services, as opposed to supplies of goods,
because your supply of goods rules basically follow the movement of the goods. So it’s not relevant to where you’re established from a good spot, good point of view. It’s more about where the goods move from. And to, whereas when you’re talking about services, then establishment is critical because in order for the reverse charge to apply, it’s where the recipient is established.
Um, and in order for an entity to be established somewhere at acquire VAT, number of that particular member States, the tax authorities would need to satisfy themselves that you have the sufficient, both human and technical resources requires to supply those particular services. So there’s no definition within the legislation per se, John, if it does come from what the European courts have said.
Yeah. So that human and technical resources then, cause we were talking to Karloff stock there obviously just say the goods there. So it’s better for somebody over there effectively to do to work or is that, you know, cause I think you said Really about the potential for perhaps that supplier is actually making the supply domestically in that member state. So I think that will be the more,
the reason for not having an establishment there because in those instances you’re not talking about color stocks there. It could be the case that if the supplier is established and the same member stays as the purchaser that the goats have actually come from the suppliers establishment to the purchaser and that case, it’s a domestic supply and you’re not talking about cross border movement of goods.
There’s already those particular situations. Okay. So the third quick fix then as they’re called relates to chain supplies, um, and this would be where you have, you know, a whole quite a number of suppliers and purchasers within the same supply chain. So you wouldn’t have a situation where there’s more than three or more particular parties and the goods are being supplied between the various parties,
but ultimately there’s only one particular movement of the goats. Usually from the person first in the chain to the person that’s lasted the chain, but you could have a number of intermediaries in between worlds making the supply of the gods and these cases, um, what’s difficult or has been difficult to determine in the past. And again, it comes from Musa J case law,
is that how do you attribute the zero rating transport or the Intercommunity supply to the movement of the goods? So once you have a number of supplies at the same goods in the chain, which supply in that chain can be zero racers, which supply most fall within the domestic charging provisions. So, um, here again, there has been number of cases on this whole point and the most famous one have been email,
um, where you were trying to determine which movement of the goods actually qualifies for the Intercommunity supply. I E the zero rating conditions. And how do you determine that you can prove the goats have left your particular member States, what transport documentation have you. So these particular new rules now trying to identify in a more simpler basis as to which supply in the chain can be the Intercommunity supply.
And here it’s the supply where the goods are supplied to an intermediary in the chain, and that intermediary is responsible for arranging the transport. So that is the supply which will qualify for the zero rating from our promises onto the Intercommunity supply rooms. And then the final one then relates again to documentation. And I suppose it’s linked to all of the other quick fixes that we’ve mentioned,
and this is really how do you prove you’ve made an Intercommunity supply? And that all goes back to being able to prove to the tax authorities that you have sufficient documentation and evidence to show that the goods have actually left Ireland or they’ve left the UK or France or Spain or wherever that they’ve actually left your particular member stage. Um, and again, we’ve got the plan behind this rule would have been,
was to try and harmonize all of the rooms across the EU. Because again, there was a whole raft of different measures and different procedures going on in different member States. So now you have to be able to provide two non contradictory documents that showed that the goods were transported to another EU member state, and those documents have to be issued independently of each other.
So if you have those documents to hand, keep those as part of your books and records, and that would support your application of the zero rating in the case of an integration supply. Okay. So the next part of the ELD then is the one I mentioned at the outset, which has been postponed somewhat by a number of months because of COVID-19. And these will be all in relation to the e-commerce changes that are coming in next year.
And the ones I’ll touch on today really relate to the supply of goods as opposed to any kind of supplying services. Um, so for the gold spot, we’re looking at really kind of four different types of areas that the rooms are changing for. The first one is in relation to, as oppose a plan to simplify the, the VAT rules for small businesses,
particularly whether sending goods online. Um, the second one then is to make sure that all online sellers, um, are, have to comply with the VAT obligations in the EU. And they’re bringing in a new, I suppose, a one stop shop. So quite similar to the mini one stop shop that we have at the moment for e-services and telecoms,
a broadcasting services to the that’s going to be developed further to enable, um, online sellers of goods to use a similar portal so that the VAT is dealt with in one particular location and one VAT return be completed, um, and just makes it a lot easier for online sellers than to deal with their obligations. The third rule in that they’re going to change,
it will be where they’re making the online marketplace. So the big platforms were very skilled, are sold that they’re going to be made liable for accounting and collecting the VAT in relation to particular sales on their platforms. And that would be in relation to, um, non EU centers that operate on those platforms and that the customers are based within the EU. So again,
it’s just trying to make sure that there’s a level playing field from an<inaudible> seller’s point of view as to who’s accounting for VAT, to make sure that there’s, isn’t a supple significant distortion of competition between the various parties. And then the last one that they’re bringing in, isn’t just in relation to, you know, the important, good value of less than 22 euros does last exemption for that.
So that’s also going to be changed. So just to make those a little bit more detail, and at the moment when somebody is selling goods online to consumers across the EU, we have the distance selling rules, which apply so that when the goods are sold from a particular member state, you charge VAT of your own member state. However, once you reach a threshold and another EU member state,
then you have an obligation to be VAT registered there and charge domestic VAT to your customers. But the are now going to change the threshold rules in relation to a distance selling at the moment, there’s a variety of thresholds, which would apply in their range from between 35,000 to a hundred thousand euros in each member state. So that does quite a lot of monitoring obligations for suppliers to make sure they’re accounting for the correct VAT in the correct member state.
So they’re going to have a single threshold across the year of 10,000 jurors, and that will apply to all of your sales to your EEO customers per annum. So again, this is really aimed up those smaller SMEs that are engaged in online selling, and they can remit their VAT. Then through the one stop shop, if you sell below a particular threshold,
then you charge VAT of your own member States. On the case of an Irish supplier, they would charge Iris VAT in respect of their sales. Once you go above the threshold, then you’re obliged to charge VAT of the customer’s member state. So again, that will all be dealt with through the one stop shop, as opposed to having to register in every single member stage where you’ve reached the threshold.
So again, the purpose behind all of this is to try and reduce the compliance burden and cost for a smaller businesses that operate in the online space. Now, I suppose one of the challenges though behind it would be clarity. You know, a small business would need to know, I would think about rates and all of the EU member States and perhaps update their systems,
um, and, uh, information that they have in relation to their particular supplies. The second one, I mentioned that it was in your online platform where you’re selling a, um, a new marketplace or a platform, and you’re not a new seller, but you’re selling to EU customers. So at the moment, those goods are sold, sold via the third party platform.
Um, and either VAT, um, is either dealt with, or it’s not, whereas going forward from July, 2021, the online platform itself is actually going to be directly liable to charge and to pay the VAT on the particular sales that happen on its platform is when applying to any goods that are importers up to a value of 150 years or any injury you sales by non-use suppliers.
So again, it’s, as I said, just trying to make sure that there’s a level playing field, the platform will be required to register for VAT in charge VAT of the particular member States, wherever the customers are, are based. And again, the will be a possibility for the platforms to use the one stop shop, to be able to deal with all of their VAT obligations in one particular location.
And when this rule comes in, if you, if there are particular goods already stored in a fulfillment center, owned by the platform, then the rules will apply. As soon as those goods are sold by the platform, then we have as opposed to sales to, um, you consumers normally by non-use suppliers. So this will be in relation to your imports.
Um, and at the moment we have bus exemption applicable to any goods that we import under 22 euros. Now, clearly over the years, this is a tiny amount of money. Um, and I think over the years has probably resulted in distortion of competition and particularly undervaluing of goods. So they’re now getting rid of that particular exemption, um, and bringing in new rules.
So on stage, we’re going to have a new reporting mechanism, which again, will avail off the one stop shop that they’re introducing, where the goods have a value of less than 150 euros. So again, the one stop shop can be used by the EU or non new suppliers. Um, as you see there in the slides, there may be a requirement for none of you suppliers to actually appoint a new intermediary,
to be able to deal with their VAT obligations in the EU on their behalf. Um, the, that instead of being collected at importation will now happen or be charged as the, um, case of supply when that particular place or point of sale happens, a big burden. Um, if the, uh, non-use supplier doesn’t use the one stop shop,
then they’re going to, it’s going to have to be dealt with by the importing entity and when the goods are actually delivered to the customer. So we’re getting rid of our now low-value relief import of 22 euros and bringing in new rules surrounding the 150 year old value. Okay. So there are, I suppose, Roundup of the EU matters that are coming in.
And I know, um, you know, July 20, 21 seems like a long time away, but again, if you have clients who are in the space of selling online, they do need to make 2 cents familiar with some of the ruins that are coming in, particularly the distance selling rooms, because that will have an impact, um, certainly on their business.
Um, but as you can see there, once there is a possibility to use a one stop shop time scenario, then it should clip down on the complaints and admin obligations for them. And then the last area I just wanted to touch on, um, is in relation to VAT groups. And it’s specifically because of the, the TDM that revenue published is just,
but it’s also, I suppose, conductor to highlight, I suppose sometimes the advantage that putting the back group and case can have for certain types of businesses. So in the first instance, as opposed to worth bearing in mind that it’s at the discretion of the revenue to grant that group, but the revenue also have powers to impose a bat group where they feel it’s for the efficient and effective administration of the tax.
So they can’t decide whether they will give you the group status or if the field, um, it’s more beneficial from an organizational point of view that can actually impose that grouping. So when you, um, I suppose to, to explain when you’re looking at a VAT group, what we’re talking about is a number of, um, persons or textbook persons or entities being treated as a single textbook person.
So the trees as one entity for VAT purposes, as with everything VAT, the role was some conditions attached to getting this particular type of relief. So in the first instance to qualify for that grouping, you must satisfy the three pillars, which would be the financial economics, economic and organizational links. So basically there has to be, you know, common ownership,
common control, uh, voting rights, um, and common ownership between the particular entities that are trying to form the group. Very importantly, the persons trying to form the group must be resident within the state and at least one of the members must be a textbook person. So to just, I suppose, look at what is a textbook person for that purposes would be somebody who’s engaged in the business activity anywhere in the world.
Whereas an accountable person, as you know, is somebody who is actually VAT registered. I either engaged in making texts with supplies of goods or services. So a textbook person would cover both businesses that are engaged in both taxable and exempt type supplies, whereas accountable persons, just culverts those entities that are engaged in, um, textbooks supplies. So for the purposes of that grouping,
you can have some non textbook persons in the group, but you must have at least one non textbook person. What happens then is when you have a VAT group in place that you have one entity, which are selected as the remitter and that they return all of the bat returns on behalf of the group members, as well as the three and the annual return of trading details.
They’re responsible for submitting those. The other non revisionists then are the other members of the group would quote their own VAT number for other purposes. So if they’re making supplies out of the group, for example, then they use their own back number, but they would also then file their Intercommunity documentation like their feeds return or interest at returns under their own VAT number.
So that should be just important to the slight difference in some of the returns. So when we’re talking about a fact group that, and we have, I suppose, a number of entities coming together that are treated as a single textbook person. Um, and the main advantage for back grouping is that the intergroup supplies, any supplies that are made to each of the group members by other group members are basically ignored for our purposes.
So they’re not treated as supplies. There’s no requirement then to issue VAT invoices because there’s no rateable supplies taking place. Um, and that can be quite a saving for some particular battle groups. One still, you have a member making a supply outside of the group or to a third party than the normal VAT rules obviously apply. It’s only for your internal supplies that the fact grouping provisions would kick in.
I suppose the one disadvantage that sometimes perhaps puts entities are forming a group will be questioned that there’s joint and several liabilities wrong members of the, that group and the woman type of transaction that is excluded from your VAT grouping provisions for your intergroup supplies will be property sales. It does apply in the case of the letting of property between group members, but it doesn’t apply it.
If you’re selling property to each other within the group, then the normal VAT routes and applying those circumstances. So if you have a situation where you are considering whether that group might be beneficial to your clients, then have a look at revenues TDM, which is updated in March this year. They have them, it’s quite a detailed leaflets, and it goes into provides a lot of information in relation to the three key pillars.
So how do you satisfy the financial economic and organizational links in order to qualify for fat grouping? So there’s a lot of helpful information and that their policy as regards, but brooms hasn’t changed. Um, you might recall it a number of years ago, Ireland was taken to the European court of justice in relation to actually our VAT grouping provisions, because we did allow,
um, non Taxport persons to be members of that group. Um, and we want our case in the sense that, um, the directive, the wording used in the directive simply refers to persons as opposed to textbook persons in the fat group in provision. So that meant that there was no ban on non tax for persons being included in that group. So there was no policy change then,
and the similarity, no policy change now has re in relation to the actual update that revenue has published and have added in some very good examples as to how the fat grouping works and also in relations, territorial scope. And what that relates to is this whole question of where you have cross border supplies between branches and head offices. There has been cases in the past as to determining whether,
and perhaps the fact grouping provisions would apply or what that they’re treated as non supplies are spliced up outside the scope of VAT. So that would all be relevant to the instance where you’re looking at bat groups or are holding companies in particular. Um, prior to, I think it was Christmas last year revenue also updated their TDM on holding companies. And that is all very relevant also to the bat grouping position.
When you’re looking at holding companies, often you will have holding companies as members of that groups. So again, if you’re looking at the grouping TDM also look at the woman holding companies, because the whole question of import fat recovery is very important in that regard. And I suppose then to just to touch briefly on the two cases, and I suppose these are really the most famous cases when it comes to that grouping are the ones you’ll often see referred to where there is a debate as to whether there are cross border supplies involved,
or whether they’re outside the scope supplies. And the first one would have been the FCE Vikki case where you effectively had a UK head office with a brunch initially. And there was a supply of services from the UK branch to the bigger Britain, the UK HQ to the Italian brunch, and those supplies were treated as being outside the scope of VAT because the branch is not a textbook person.
It wasn’t independent to the HQ. It was actually part of the HQ. And that’s the way I suppose, bunches and head offices operators. So if they have cross-border supplies, then they’re outside the scope of VAT, the commission of the Ireland I’ve mentioned already in relation to persons. And then the other, I suppose, a contentious case was the Scandia America case.
There’s differing interpretations as to the implications arising from Scandia, but as suppose by way of summary, this all relates to again where you might have a head office and a branch in another member stage at that branch is actually a member of a VAT group in that other member state, what are the implications arising on, on cross border supplies? So in the Scandi America case,
we had a us head office with a Swedish brunch, but that’s what we just brunch was a member of the Swedish fat group. Um, they acquired third party supplies of it services by the head office in America. And they onward supply to those services, to the Swedish brunch who then supplied them on to its group members. So the question here was whether,
uh, you know, what was the bat treatment in relation to the services acquired from the U S uh, normally any kind of cross border services you’re applying the reverse charge, whether inquires on a textbook basis. So here the court was saying that, you know, the branch was not independent, so it was not a textbook person, which is false,
was following operable from the SCE bank case. However, what it said was because that’s where dispatch was a member of a fat group in Sweden, it becomes a textbook person because that, um, it is a member of a vet group, which is deemed to be a single tax per person. So the treasures, the head office in the U S as being independent to the Swedish brunch,
and those instances, those services were liable to be a, and they had to account for VAT in the Swedish fact group on the reverse charge basis. So there are lots of different interpretations of that particular case. Um, and again, in the TDM published by revenue, there is some guidance on the territorial scope in relation to head office and branch type supplies,
cross border. So He got, I got ready. I just explained the implications of that there, on that case there, so it was a verse chart. So what, where was the tax cost for them? Yeah, I suppose they would have happened as opposed to what would have been important there is that you’re talking about banks, so they wouldn’t have the input for recovery.
So you now have, rather than a supply being outside the scope of VAT, you now have a supply, which is actually charged with VAT and a potential cost attaching to it because there was no input that recovery. So, um, that, that was why that was, um, an unusual decision, um, because they looked at us as being the,
the Swedish branch, because it was part of the group, uh, or sorry, parts of a different fact group. They treated the supplies of services as being supplied from the head office to the group, which they treated as a different textbook person for both purposes. So yet there was a about customizing those circumstances, Uh, job. Um, eh,
there was just one real quick, you know, on the fact group, just so I was thinking about that. Let’s say you have a VAT group, two companies, or whatever, a group companies, and that’s the, one of them is a construction company. And it does work for theater company, uh, you know, which is providing an exempt service.
So maybe, I dunno whether it’s construction or whatever, right. No property or whatever. Okay. SRN that they’re in a VAT group in relation to that. So the construction company does work for us. It then charges the, the auto company. Uh, and I presume during the, that group, cause I don’t have to charge any veteran relations services,
but what about the work that the costs and carved by date of construction company to do, to work for the other entity when the group who is an exempt services in their service, they’re excited the group, can the construction company reclaim the VAT on any cost of day and carved in construction costs at, to do, to work for DOD? Yeah. I mean,
if, if all of the outputs, shall we say of the group are taxable in the role and right then there shouldn’t be an issue as regards input fat recovery on the cost coming into the group as regards to the work staff were carried out. So in that case that did that got to walk right out. It was an exempt supplies. So they would sort of will be issues down for the construction company.
We came and VAT on some of the costs of doing the work for the other entity. Yeah. Maybe a thought recovery issues, if there’s, I suppose some elements of partial exemption or exemption within the, that group as well. So you might have entities where some people are carrying out taxable activity, someone carrying on exempt activities, but you’re still looking at the input,
but recovery of the entire group, vis-a-vis the actual supplies made by that particular group. So you would still have a similar scenario of restricted imperfect recovery if there’s partial exemption or exemption involved as well. Yeah. Cause like really, if not, uh, like the con the exempt, uh, Carson get into services, wouldn’t get charged, dropped by the theater group to the,
what it did to the auntie that was doing the rock will get a bad input for us. It’ll be lost revenue. We thought that there will be some element of restricted input, fat recovery, higher up in the, in the line. Alright. And have you, are you, are you gone Gabrielle already have, Oh, that’s okay. Thank you very much.
Just looking at the questions. I don’t see any questions. Um, thank you very much. Have a good afternoon. Thank you. I think Darren part points in relation to, you know, the property surrender properties, all going to be involved with this point in time. So I would see a key or two folks, Nicole with registers that are in place.
Um, so I was wondering if you have any queries or you, you you’re running auto queries in relation to, um, Gabriela’s, uh, contact details are in front of the slide, Sarah. So these food entrepreneur, uh, thanks again for again, subscribe and far to webinar. As I say, we’re continuing our webinar already, Irish tax and accounting summer to next week.
So I’ll choose in terms of, so if you’re interested in how it opens you on and thanks again for your question,<inaudible>.