Pasty tax too hot to swallow

“Backdown on Pasty VAT. I feel such a fool for hoarding all those hot pasties now.” – Graeme Garden

Budget 2012 promised that all takeaway food sold above ambient temperature would be subject to VAT at the standard rate.

This was aimed at some bakers and supermarkets who had been selling hot pasties, pies and rotisserie chickens with VAT applied at the zero rate. They argued the goods weren’t sold hot for consumption, but rather for presentational or health and safety purposes.

Predictably there was an outcry. A tabloid newspaper even hired an actress dressed as Marie Antoinette to follow Mr Osborne around.

So he changed his mind.

Pasties and other bakery items will no longer attract VAT if they are “cooling down” after being removed from the oven.

That leaves the rotisserie chicken as the major casualty of fiasco.

Static caravan in u-turn saga

Now that’s not something you see every day: a static caravan involved in a u-turn.

Budget 2012 proposed introducing VAT at the standard rate of 20% to the supply of static caravans from October 2012.

Static caravans are currently zero rated for VAT, with only their fixtures and fittings being subject to the standard rate.

Predictably the holiday industry didn’t like the idea of charging their largely non-VAT registered customers 20% VAT and kicked up a stink.

Then the static caravan was involved in a u-turn.

George Osborne said that plans to tax static caravans at 20% will be altered. They will now attract VAT at a reduced rate of 5% from next April. Unless he changes his mind again.

VAT changes – caravans

At present, sales of touring caravans, static caravans and holiday lodges are zero-rated for VAT purposes. The only items that are part of their sale that are taxable at the standard rate of VAT are the white good.

This is changing from 1 October. From that date sales of holiday and leisure caravans will be subject to standard rate VAT.

Residential caravans (aka ‘park homes’) designed and constructed for year-round living will continue to be zero-rated for VAT.

If your business sells static caravans the terms of occupancy will now be important when determining the VAT treatment. A static caravan on a holiday park with only 10 months available occupancy will have to be standard rated.

If you sell caravans, whether new or second hand, you should contact us to discuss your pricing structure and available VAT schemes.

VAT traps – the time of supply

The recent case of Bromley Emergency Training and Developments Ltd (TC1728) highlights how important it is to get the time of supply right for your business.

This company invoiced for training courses in advance. They didn’t do the work at that point though, so they accounted for the supply when the courses took place. HM Revenue & Customs had a different view. They said issuing a VAT invoice was the point of supply.

The result was that by treating the supply as the date payment was received it meant that the effective date for VAT Registration was breached earlier than thought. Penalties soon followed!

With a simple change to the way the company did things this could have been avoided.

If you’re concerned about the timing of transactions for VAT purposes and want to make sure you’re doing things right, then give us a call.

Pasty tax too hot to swallow

Static caravan in u-turn saga

VAT changes – caravans

VAT traps – the time of supply

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