VAT Finance and Admin Conference Marta Wojcik - VAT Officer 28 November 2011

VAT issues: VAT liability of supplies to academies VAT & Salary Sacrifice Scheme HMRC inspection & penalty regime Capital expenditures at VA school

VAT liability of supplies to academies Supplies by local authorities to academies should be standard-rated unless specifically excluded from this rule, e.g. being VAT- exempt welfare care or education.

VAT liability of supplies to academies The supply of teaching staff between eligible bodies - VAT-exempt supply of education. Catering – standard rated

Salary sacrifice schemes and VAT Common benefits provided under salary sacrifice arrangements: childcare vouchers work-related training cycle-to-work leased cars

Salary sacrifice schemes and VAT From 1 January 2012 the amount of salary sacrificed is to be treated as a consideration for a supply. This means that the employer will be obliged to account for VAT on the amount of salary sacrificed by the employee.

Salary sacrifice schemes and VAT Which schemes are affected? cycle-to-work (and cyclists’ safety equipment) - liable to the VAT at standard rate childcare (whether at a workplace nursery or by way of vouchers or direct payment to the childcare provider, as with the Council’s scheme) and work-related training are exempt from VAT,

Salary sacrifice schemes and VAT HMRC has introduced a transition period where all agreements signed or otherwise agreed by the parties before 1 November 2011 and which extend beyond 31 December 2011 will not be affected by the change.

HMRC inspection Risk Assessment undertaken by HMRC last year for all LA’s Two classifications - ‘low risk’ or ‘not low’ risk BBC classed as ‘not low’ risk HMRC VAT Customer Relationship Manager will issue an action plan which will involve regular visits to check VAT accounting procedures Ensure high level of VAT compliance - to avoid financial penalties Only area of concern surrounds VA Schools Capital expenditure

Penalty Regime “Get it right the first time” If you take reasonable care to get your tax right, HMRC will not charge you a penalty – even if you do make a mistake

Penalty Regime – “reasonable care” Personal circumstance and ability are taken into account when assessing reasonable care You are expected to keep accurate records to make sure your Tax Returns are correct Check what the correct position is when you don’t understand something Tell us or HMRC promptly about any error you discover after sending your Tax Return or document

Penalty Regime The penalty rate for inaccurate VAT returns: Careless (you fail to take reasonable care) 0% - 30% Deliberate (you knowingly send HMRC an incorrect document) – 20% - 70% Deliberate and concealed (you knowingly send HMRC an incorrect document and try to conceal the inaccuracy) – 30% - 100%

Penalty Regime How you can reduce a penalty: Tell HMRC about your error without being asked Assist HMRC to work out what extra tax is due Give HMRC access to your records to check their figures If you have failed to take reasonable care, the penalty may be reduced to zero if you disclose the error and help them work out the extra tax due

Capital expenditures at VA school Outstanding Items : meaning of “own LA’s resources” definition of capital expenditure - premises- related expenditure

THANK YOU Marta Wojcik - VAT Officer 28 November 2011