News
Monthly VAT News - May 2011 - 2011-05-31
Queen Mary University - Supply of plant and machinery not zero-rated
Queen Mary University (QMC) entered into an agreement with Lloyds Property Investment Company No 5 Ltd (LPIC) for the construction of a new building, whereby QMC granted a lease of the land to LPIC, who in turn granted an underlease back to QMC. It was contended by QMC and LPIC that the VAT due on the rental payments should only partly be charged at the standard rate, since QMC was not making a single supply of land, but also a supply of plant and machinery. They claimed that 24% of this equipment qualified for zero-rating as a supply of "certain adaptations to a building to accommodate handicapped people" and "the supply of medical and other equipment for use by a charitable institution providing medical care". Essentially, they believed it was not wholly a lease, only part of it was, and a proportion of the charges should be zero-rated. The Tribunal disagreed and held that the elements received by QMC were so closely linked they formed a single composite supply. Moreover, this was a single supply of permanently installed standard rated plant and machinery, which could not be split; only if the supply falls wholly within the zero-rating provisions do they apply.
Storage in containers - Exept from VAT
The Tribunal has found in the case of David Finnamore (t/a Hanbridge Storage Services) that the supply of storage facilities located at the customer's site were in fact a supply of an interest in land, and therefore exempt from VAT. HM Revenue and Customs (HMRC) however, maintained that the supply was one of standard-rated storage facilities, and that the containers were not "immovable property". Ultimately, the Tribunal ruled that the dominant supply of Hanbridge Storage Services was to grant a licence to a customer to occupy the site, a defined area of land. This is effectively an interest in land, and should be exempt from VAT unless opted to tax.
Publication of partial exemption guidance for insurers
HMRC and the Association of British Insurers (ABI) have issued a publication offering guidance to insurers looking for approval for a fair and reasonable partial exemption special method. Although not mandatory, it aims to minimise costs and delays in developing such schemes. The guidance can be found at www.hmrc.gov.uk/menus/abi-guidance-insurance.pdf.
UK Insurance Premium Tax - Warning for Isle of Man taxpayers
The Isle of Man government has issued a warning to taxpayers in the Isle of Man who pay UK Insurance Premium Tax (IPT), to be aware of whether such risks are actually exempt from IPT. Essentially, when the insured party is resident in the Isle of Man or the risk is located in the Isle of Man, the risk is not subject to IPT. However, if the insured party is resident in the Isle of Man and the risk is located in the UK, then the risk may be subject to IPT. Customers have been advised to confirm with their insurance companies (or other such providers), whether the risks are exempt from IPT before taking out insurance with UK companies.
for further information or advice about any of these issues please contact indirect tax partner Bob Jones on 020 7516 2295 or by email rjones@littlejohnllp.com
