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We provide expert tax advice including compliance and health checks, VAT optimisation, training, and provision of knowledge. On a more strategic level, the VAT Liaison Strategy Team provide timely planning advice and uses the most innovative solutions to help you protect and maximise your resources. You can click on the links here to get more detailed information on the services we offer.

 

Our new service, reflects the increased emphasis placed by HM Revenue & Customs (HMRC) on compliance and represents a significant move away from the traditional VAT services currently being offered to the NHS and government sectors. The benefits of using are:-

  • Full compliance every return period instead of annual compliance checks;

  • VAT is validated in the correct time, form and manner, therefore removing one of the concerns that can arise from a visit by HMRC;

  • The Trust’s Monthly Cash flow can be maximised and financial planning can be more accurate;

  • VAT Liaison becomes responsible for ensuring that the correct figures are recorded on your VAT Return. In the past Advisors have not followed through to this degree and often additional recovery identified during a refund direction review never made it on to the Return;

  • An organisation can learn much quicker as the validation exercise will occur more frequently.

VAT planning opportunities are often lost because the schemes/contracts pass unnoticed until it is too late and the submission dates for correspondence to HMRC are missed. Therefore, as part of the monthly visits, in addition to Finance, we would meet with the different departments who are affected by VAT, such as Estates and Supplies, to find out future plans for the months and years ahead.

Refund Direction

We assist organisations under Section 41 VATA 1994 to recover VAT on non-business purchases.

Capital

VAT legislation surrounding land and property transactions is complex. It is essential when planning capital projects that specialist VAT advice is taken as early as possible. The intention of the organisation is all important and can be the difference between VAT efficiency and a much larger unnecessary cost.

Business Activities

Where a public sector organisation supplies goods or services for a consideration, it could be engaged in a business activity. This places it in the same VAT position as a commercial organisation.

These supplies will be subject to VAT at the standard rate, the zero rate or possibly the reduced rate. However some supplies made by public sector organisations will be outside the scope of VAT or exempt from VAT. The correct VAT rates need to be charged and the opportunity is available to recover input VAT.

Consultancy

VAT Liaison provide a wide range of consultancy services to help you maximise your VAT recovery. We can also help you negotiate with HM Revenue & Customs on those complex calculations. If required, we can also represent you before the VAT & Duties Tribunal

PFI / PPP

Every major PFI/PPP transaction should be considered from a VAT viewpoint to ensure that it is VAT efficient.

Health checks and compliance 

Compliance and health checks are available to clients who want to know how to deal with the income received and what VAT can be recovered.

Partial exemption

Partial Exemption requires an analysis of the income streams of the organisation to ascertain whether they are taxable, non-business or exempt. Organisations often undertake large capital projects for which zero rating is not applicable. In such cases the project would be covered by the Capital Items Adjustment Scheme.

Zero Rating

VAT Liaison would identify any areas where purchases can be zero rated.

VAT Liaison operate a VAT helpline

Tax Helpline™ 0800 700 652
Available Monday to Friday 9.00am to 5.30pm

Training

Many organisations would like to become as self sufficient as possible in respect of VAT. In such cases we will carry out training courses which would be tailored to the particular requirements of the business and staff.

Corporation Tax

Corporation Tax (CT) is an evolving area and interpretation of the legislation can seem difficult without proper guidance.

VAT Liaison can help you manage your transactions in the most tax efficient manner, while saving you time in the implementation.

Corporation Tax service provision includes:

  • Evaluation of client systems to provide the information required for the CT calculation

  • Categorisation and adjustment of profits

  • Planning and profit distribution and possible covenanting to charitable funds

  • Interaction of CT and VAT

  • The timely filing of the relevant forms

  • Tax helpline

Lennartz Mechanism

An NHS Trust is entitled to make use of what is referred to as the Lennartz mechanism, which is a relatively new method of recovering VAT for bodies engaged in non business activities.

One of the main principles behind the Lennartz mechanism is the intention at the time of construction.

The main condition for using the Lennartz mechanism is that there must be a taxable supply made within the building. At present, HMRC has not set any de minimis level of such activities, although the more substantial the taxable supplies the more likely any proposals are to be accepted. Taxable supplies can include the following:

  • Catering for staff and visitors

  • Vending machines

  • Commercial laundry owned and run by the Trust

  • Leisure centre owned and run by the Trust

  • Energy centre which provides utilities to non NHS bodies

  • The sale of drugs to third parties such as dentists, GPs, private hospitals and high street pharmacies.

* This list is not exhaustive and any taxable supply can be included.

The main benefit of the Lennartz mechanism is that the Trust will be able to recover all or most of the input VAT on each payment, and then repay the VAT which relates to the non business use over a period of 10 years. If the level of non business use remains constant over the 10 year period then the payback should be equivalent to the VAT recovered. Although there are obvious initial savings, the VAT must be repaid and the administrative implications must be considered.

Fuel and Power

The purchase of all forms of fuel and power will normally bear VAT at the standard rate and the Climate Change Levy will also be added.

There is scope for VAT to be charged at the lower rate of 5% and in such cases the CCL is also relieved. This normally only applies to residential and charitable properties. Where a Trust is not receiving the maximum relief to which it is entitled it should be possible to obtain a refund of overpaid VAT for the previous three years.

Managed Equipment Services

New medical equipment is one of the Trust’s main costs. VAT recovery is not allowable on the purchase or lease of such equipment and so this becomes an additional cost to the Trust. The concept of managed equipment services, where the supplier provides the equipment and a range of additional services, is becoming increasingly common within the NHS. Such agreements can offer scope for VAT recovery but this is a contentious area and VAT recovery is often refused by HMRC.

Employment Tax

Employers need to comply with the PAYE regulations and therefore need to ensure they are aware of the inevitable and regular changes in legislation. Non-compliance can result in large penalties for the employer as well as potential overpayment of tax to HM Revenue & Customs.

VAT Liaison can advise on all aspects of PAYE and NI to ensure you maintain accurate records and payments to HM Revenue & Customs, as well as enabling clients to implement tax efficient and rewarding benefit schemes for their staff.

PAYE service provision includes:

  • Expenses and benefits advice and implementation, including salary sacrifice

  • Compliance reviews

  • Budget reporting

  • Negotiating agreements with HM Revenue & Customs and assistance with audits

  • Training

  • Consultancy

  • PAYE helpline

Salary Sacrifice

A salary sacrifice happens when an employee gives up the right to receive part of the cash pay due under his or her contract of employment. Usually the sacrifice is made in return for the employer’s agreement to provide the employee with some form of non-cash benefit. The “sacrifice” is achieved by varying the employee’s terms and conditions of employment relating to pay.

Salary sacrifice is a matter of employment law, not tax law. Where an employee agrees to a salary sacrifice in return for a non-cash benefit, they give up their contractual right to future cash remuneration.  The extent to which savings are achieved is dependant upon the number of staff joining the Scheme. 

A Salary Sacrifice Scheme will have an affect on the current VAT recovery the employer reclaims. VAT recovered under the contracted-out services legislation will still be recoverable but adjustments will need to be made for any VAT recovered under business activities or capital works.

Construction Industry Scheme (CIS)

Its not just traditional builders who are required to be registered for CIS. Broadly speaking construction work refers to any work in construction, alterations, repair, decoration or demolition of buildings. Therefore if any business spends over £1 million a year (on average over a three year period) on this type of work, then they may be liable to register for CIS.

The rules of the scheme changed in April 2007, which has changed the administration of the scheme as well as now introducing a declaration to confirm you have checked the employment status of the sub-contractor.

VAT Liaison can assist by assessing if your organisation needs to register for CIS, check the correct employment status of sub-contractors and review compliance to ensure all statutory requirements are being met to avoid financial penalties.