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Post by Deleted on Nov 30, 2019 11:40:10 GMT
Below is the information given out by CRT several years ago when the issue was being discussed at several meetings. The Trust is required by legislation to be registered for VAT. If you are registered for VAT you must charge VAT on all of your supplies where the law requires it. A VAT registered business regularly completes a VAT return in which it pays to HM Revenue & Customs all of the VAT it has collected from customers and reclaims all of the VAT it has incurred on goods and services it has acquired. However it is only possible to reclaim any VAT incurred if the VAT can be attributed to taxable business activities. The majority of all expenditure on the general maintenance and major repairs of the canal infrastructure includes VAT. Prior to 1989 British Waterways (BW) did not charge VAT on its boat licences and as a result was unable to recover VAT on its general repairs and maintenance of the canals. In 1989 BW opted to charge VAT on its property including canals to enable it to generate taxable activities (including charging VAT on the boat licence) on the canals, which in turn enabled BW to recover the VAT incurred on general maintenance and refurbishment. At the time BW did not increase the overall cost of the boat licence to the customer. If for example the licence at the time cost £300, after BW opted to charge VAT the licence still cost £300 (£255+ £45 VAT). In other words this cost was not passed on to BW’s customers. The Trust has continued to apply the same options to charge VAT. Without this option to charge VAT on the boat licence, at today’s level of expenditure on the canal infrastructure, the Trust would be losing up to £20 million per annum in lost VAT on the general and major repairs, and the price of the boat licence and other income streams would need to be increased by a significant amount to offset this loss. Thanks for that, Steve, very useful. Complete tripe from beginning to end, of course, but what else would you expect ? Can you put a name and a date to it ? I've no idea who actually authored it. We had been questioning the vat angle at meetings with Simon salem and parry back in 2013. We also at the time contacted HMRC for clarification. The result was the reply above which was eventually published to various sources.
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Post by NigelMoore on Nov 30, 2019 11:40:41 GMT
Below is the information given out by CRT several years ago when the issue was being discussed at several meetings. The Trust is required by legislation to be registered for VAT. If you are registered for VAT you must charge VAT on all of your supplies where the law requires it. A VAT registered business regularly completes a VAT return in which it pays to HM Revenue & Customs all of the VAT it has collected from customers and reclaims all of the VAT it has incurred on goods and services it has acquired. However it is only possible to reclaim any VAT incurred if the VAT can be attributed to taxable business activities. The majority of all expenditure on the general maintenance and major repairs of the canal infrastructure includes VAT. Prior to 1989 British Waterways (BW) did not charge VAT on its boat licences and as a result was unable to recover VAT on its general repairs and maintenance of the canals. In 1989 BW opted to charge VAT on its property including canals to enable it to generate taxable activities (including charging VAT on the boat licence) on the canals, which in turn enabled BW to recover the VAT incurred on general maintenance and refurbishment. At the time BW did not increase the overall cost of the boat licence to the customer. If for example the licence at the time cost £300, after BW opted to charge VAT the licence still cost £300 (£255+ £45 VAT). In other words this cost was not passed on to BW’s customers. The Trust has continued to apply the same options to charge VAT. Without this option to charge VAT on the boat licence, at today’s level of expenditure on the canal infrastructure, the Trust would be losing up to £20 million per annum in lost VAT on the general and major repairs, and the price of the boat licence and other income streams would need to be increased by a significant amount to offset this loss. You have published that before, and it bemused me then. (Then again, the whole VAT business does.) It is true enough that VAT can only be recovered in respect of the costs of supplying a service – but even if the service you supply is zero-rated, the service VAT charge (at 0%) still qualifies you for rebate on the costs to you of supplying it. Only if the service/supply you provide is tax exempt or “out of scope” will the VAT you pay in respect of supplying that be irrecoverable. If a licence or registration fee is considered to be a statutory fee, then it is “out of scope”, and charging VAT is not only illegal, you would still be unable to recover VAT paid as cost of supply. If such were tax exempt, the same applies. If supply of a licence or registration certificate was zero-rated, then you could reclaim your costs regardless of the fact that the sum collected in respect of VAT was zero. So there would be no benefit in charging more anyway. If supplying licences &/or registration certificate IS vatable (at either 5% or 20%) then that would be non-discretionary, so I cannot see how BW – followed by CaRT – could legitimately say they “ opted to charge” in order to be able to recoup expenses. On another tack, supplies to qualifying Charities can be sold at the zero or reduced rate of VAT – I wonder if this is an option for CaRT as it could not have been for BW? I continue bemused.
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Post by Deleted on Nov 30, 2019 11:52:04 GMT
Below is the information given out by CRT several years ago when the issue was being discussed at several meetings. The Trust is required by legislation to be registered for VAT. If you are registered for VAT you must charge VAT on all of your supplies where the law requires it. A VAT registered business regularly completes a VAT return in which it pays to HM Revenue & Customs all of the VAT it has collected from customers and reclaims all of the VAT it has incurred on goods and services it has acquired. However it is only possible to reclaim any VAT incurred if the VAT can be attributed to taxable business activities. The majority of all expenditure on the general maintenance and major repairs of the canal infrastructure includes VAT. Prior to 1989 British Waterways (BW) did not charge VAT on its boat licences and as a result was unable to recover VAT on its general repairs and maintenance of the canals. In 1989 BW opted to charge VAT on its property including canals to enable it to generate taxable activities (including charging VAT on the boat licence) on the canals, which in turn enabled BW to recover the VAT incurred on general maintenance and refurbishment. At the time BW did not increase the overall cost of the boat licence to the customer. If for example the licence at the time cost £300, after BW opted to charge VAT the licence still cost £300 (£255+ £45 VAT). In other words this cost was not passed on to BW’s customers. The Trust has continued to apply the same options to charge VAT. Without this option to charge VAT on the boat licence, at today’s level of expenditure on the canal infrastructure, the Trust would be losing up to £20 million per annum in lost VAT on the general and major repairs, and the price of the boat licence and other income streams would need to be increased by a significant amount to offset this loss. You have published that before, and it bemused me then. (Then again, the whole VAT business does.) It is true enough that VAT can only be recovered in respect of the costs of supplying a service – but even if the service you supply is zero-rated, the service VAT charge (at 0%) still qualifies you for rebate on the costs to you of supplying it. Only if the service/supply you provide is tax exempt or “out of scope” will the VAT you pay in respect of supplying that be irrecoverable. If a licence or registration fee is considered to be a statutory fee, then it is “out of scope”, and charging VAT is not only illegal, you would still be unable to recover VAT paid as cost of supply. If such were tax exempt, the same applies. If supply of a licence or registration certificate was zero-rated, then you could reclaim your costs regardless of the fact that the sum collected in respect of VAT was zero. So there would be no benefit in charging more anyway. If supplying licences &/or registration certificate IS vatable (at either 5% or 20%) then that would be non-discretionary, so I cannot see how BW – followed by CaRT – could legitimately say they “ opted to charge” in order to be able to recoup expenses. On another tack, supplies to qualifying Charities can be sold at the zero or reduced rate of VAT – I wonder if this is an option for CaRT as it could not have been for BW? I continue bemused. Yes I have published it previously. It's always been an annoying bee in my bonnet.
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Post by NigelMoore on Nov 30, 2019 12:11:23 GMT
From a canalworld discussion on the topic, 2015 – www.canalworld.net/forums/index.php?/topic/74419-vat-on-licence/Idunhow quoted the same bumpf, with the additional bit: “ Why the boat licence is not a tax
The boat licence is not a tax in same way that the road fund licence or TV licence is levied. In addition to permission to navigate our waterways, the Trust provides other facilities along the network which are available only to licence holders. These include places to take on clean water, sanitary and waste disposal facilities, shower blocks, etc. No additional charge is made for these services, although a deposit is taken for the entrance key; it is classed as a supply of goods and services for the purposes of VAT. This contributes towards the cost of caring for the waterways. Without this, we could not dredge the canals; keep the locks in order; the tunnels safe; and all the other things you would reasonably expect from a navigation authority. Why doesn’t the Environment Agency charge VAT on their Boat Licence
The EA has a special exemption in VAT legislation that allows them to reclaim the VAT suffered on work carried out on their waterways. This means it does not need to make the same election as the Trust. Many years ago a BW request to HM Treasury for BW to have the same special exemption as the EA was rejected. This is why the VAT position for the two licences is different between the two authorities.” That last raises the question as to whether CaRT could now apply for the same exemption, based on their new classification as a charity. Then the whole question of VAT or no VAT on licences and registrations would be moot; they could do as the EA does and recover their VAT paid expenses regardless. I still cannot see how, for a VAT registered company, it is possible to " make the same election"; one can elect to be a VAT registered business if income is below a certain figure, but above that it is compulsory, and once registered - whether voluntarily or compulsorily - the idea that it can "elect" to charge VAT on applicable goods and services is surely questionable?
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Post by Gone on Nov 30, 2019 12:45:33 GMT
From a canalworld discussion on the topic, 2015 – www.canalworld.net/forums/index.php?/topic/74419-vat-on-licence/Idunhow quoted the same bumpf, with the additional bit: “ Why the boat licence is not a tax
The boat licence is not a tax in same way that the road fund licence or TV licence is levied. In addition to permission to navigate our waterways, the Trust provides other facilities along the network which are available only to licence holders. These include places to take on clean water, sanitary and waste disposal facilities, shower blocks, etc. No additional charge is made for these services, although a deposit is taken for the entrance key; it is classed as a supply of goods and services for the purposes of VAT. This contributes towards the cost of caring for the waterways. Without this, we could not dredge the canals; keep the locks in order; the tunnels safe; and all the other things you would reasonably expect from a navigation authority. Why doesn’t the Environment Agency charge VAT on their Boat Licence
The EA has a special exemption in VAT legislation that allows them to reclaim the VAT suffered on work carried out on their waterways. This means it does not need to make the same election as the Trust. Many years ago a BW request to HM Treasury for BW to have the same special exemption as the EA was rejected. This is why the VAT position for the two licences is different between the two authorities.” That last raises the question as to whether CaRT could now apply for the same exemption, based on their new classification as a charity. Then the whole question of VAT or no VAT on licences and registrations would be moot; they could do as the EA does and recover their VAT paid expenses regardless. I still cannot see how, for a VAT registered company, it is possible to " make the same election"; one can elect to be a VAT registered business if income is below a certain figure, but above that it is compulsory, and once registered - whether voluntarily or compulsorily - the idea that it can "elect" to charge VAT on applicable goods and services is surely questionable? Just thinking aloud, so maybe wrong. They could split the licence into two parts, firstly the ‘licence’ to navigate the waterways as an out of vat scope and a second part to cover the services provided such as sanitation stations etc. The second part having vat applied. I suppose the problem then, especially on rivers, is that they would have to make the second part optional, which would mean those with only the first part of licence would not be entitled to use the optional services, but it would be impossible to police. So crt would loose money as many would not pay for the second part if they didn’t have to, or crt could raise the cost of the first part significantly to compensate.
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Post by TonyDunkley on Nov 30, 2019 13:01:08 GMT
I still cannot see how, for a VAT registered company, it is possible to " make the same election"; one can elect to be a VAT registered business if income is below a certain figure, but above that it is compulsory, and once registered - whether voluntarily or compulsorily - the idea that it can "elect" to charge VAT on applicable goods and services is surely questionable?It's more than questionable, Nigel, . . it's actually complete and utter tripe ! It is also of course, yet another variant manifestation of C&RT's corporate megalomania and bloody-mindedness. In every respect and in every matter they regard themselves as the ultimate decision makers and the final arbiters of everything under the Sun, . . Parliament and Courts included ! As you rightly say, only VAT registered traders/companies can legitimately charge VAT on goods and services supplied to their customers, above the threshold turnover figure VAT registration is compulsory, and there isn't any discretion, or voluntary charging, with regard to VAT rates or what VAT is charged on, . . it's all decided and laid down by the Chancellor of the Exchequer and HMRC, and very definitely NOT by the traders and companies who have to collect it on their behalf. As was discussed in the early pages of this thread, I believe that BW came up with a unique world first to hand on to their even more inept and stupid successors, . . a tax fiddle that loses money for it's perpetrators ! Who, or what, could compete with that ? Who would want to ?
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Post by Deleted on Nov 30, 2019 13:03:43 GMT
My previous post deleted as not relevant to the thread.
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Post by Deleted on Nov 30, 2019 13:10:54 GMT
Are Jaffacakes cakes or biscuits? I'm sure if the McVities had decided to call them biscuits HMRC would not have complained. It does relate to the waterways as definition of providing a service to boaters comes into the argument.
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Post by naughtyfox on Nov 30, 2019 17:48:08 GMT
I'd be inclined to write to the VAT people (Tax Office / HMRC) to clear this up. Or perhaps the issue should be challenged in a court? I am bemused that this has been allowed to carry on for years and years (as we are relatively new to the waterways and have only needed Standard Licences for use of the canals we haven't come up against this particular nut before, never having been required to purchase a Pleasure Boat Certificate).
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Post by NigelMoore on Nov 30, 2019 18:23:56 GMT
Just another question or so to throw into this quagmire – were BW VAT registered in 1989, the year they apparently ‘elected’ to start charging VAT on Licences? Did they at that time also charge VAT on Registrations? If not, when did they start putting VAT on both?
I may be simple-minded here (figures not my forte) but they could not charge VAT if NOT VAT registered, and if they already were, then how could they not (if the charge is applicable) have charged VAT on licences from the time of becoming registered?
So did they ‘elect’ to become registered AND start charging VAT on licences the same year?
If this was a matter of choice, then there must have been some way of demonstrating that they had minimal or negative turnover.
From a Commons Library Briefing 3 January 2019 –
“When VAT was first introduced in April 1973 the registration threshold was set at £5,000. In 1978, it was doubled to £10,000, and has been increased each year since 1980. Clearly the choice of a threshold will always represent a balance between the need to minimise the burden of tax collection, and the disadvantages from widening the existing exemption. As the then Chancellor, Anthony Barber, explained in his Budget Statement in March 1972, when VAT was first introduced, “there are two considerations: the loss of revenue, and the need to ensure equity as between small and large businesses in competition with each other.”13 In the 1990 Budget, the threshold was set at £25,400, which was in line with the increase in inflation since 1973. In the 1991 Budget the then Chancellor Norman Lamont announced that the threshold would be increased to £35,000:”
file:///C:/Users/User/Downloads/SN00963.pdf
I suspect that BW’s revenue stream was greater than £35,000/annum in 1989, so for registration to be voluntary, their “turnover” would have to be interpreted in the mysterious way that bedevils me every Corporation Tax Return – I have yet to understand it (well, I get to some understanding before completion of each Return, but my brain promptly shuts down on the whole ghastly ordeal, and I enjoy a year’s respite before having to work it all out again.)
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Post by metanoia on Nov 30, 2019 18:33:47 GMT
I was tempted to edit dogless's text... but won't. Just needs a few letters removing. Anyway, back on subject, how about distributing information about this VAT issue to all boaters? Perhaps it's about time a proper organisation was made for boaters to give them some clout? Thought this was an unmoderated forum? Who appointed the "cut and paste" champion of the universe with the authority to edit other members' input? met x Sorry - not appropriate to the thread but just wading through it and ….
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Post by naughtyfox on Nov 30, 2019 18:43:25 GMT
I was tempted to edit dogless's text... but won't. Just needs a few letters removing. Anyway, back on subject, how about distributing information about this VAT issue to all boaters? Perhaps it's about time a proper organisation was made for boaters to give them some clout? Sorry - not appropriate to the thread but just wading through it and …. Do you have anything interesting to say about VAT imposed on Pleasure Boat Certificates?
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Post by TonyDunkley on Nov 30, 2019 18:49:59 GMT
I'd be inclined to write to the VAT people (Tax Office / HMRC) to clear this up. Or perhaps the issue should be challenged in a court? I am bemused that this has been allowed to carry on for years and years (as we are relatively new to the waterways and have only needed Standard Licences for use of the canals we haven't come up against this particular nut before, never having been required to purchase a Pleasure Boat Certificate). It's not quite that simple, Ross. When BWB first breathed life into this VAT shambles [see my post from yesterday on page 67 of this thread] they would have blinded Customs & Excise - the administrators of VAT before the days of HMRC - with virtually the same concoction of double talk, lies, and bullshit about boat licensing and registration with which they and their C&RT successors went on to fool the Courts and the Judiciary into endorsing their ever increasingly outrageous antics with regard to abusing various of their statutory powers simply to satisfy their appetite for depriving people of their boats and homes. To have the best chance of persuading HMRC that they have to straighten C&RT out over the wrongful collection of VAT on boat Licences and Registrations, first C&RT's wrongdoings must be thoroughly exposed through, and with, the endorsement of the Courts.
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Post by metanoia on Nov 30, 2019 19:06:57 GMT
Sorry - not appropriate to the thread but just wading through it and …. Do you have anything interesting to say about VAT imposed on Pleasure Boat Certificates? Having spent many years as the Financial Controller for a food manufacturing company in East Anglia where the VAT rules were in constant negotiation/debate I could drone on and on .. without recourse to "cut and paste" crap quotes - hence my interest in and reading of the thread. However, I think you will see my post merely called into question your qualifications to "edit dogless's post" - and that of any other poster on an unmoderated forum. Carry on. met x
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Post by TonyDunkley on Nov 30, 2019 19:11:04 GMT
. . . . . . . . . . . I suspect that BW’s revenue stream was greater than £35,000/annum in 1989, so for registration to be voluntary, their “turnover” would have to be interpreted in the mysterious way that bedevils me every Corporation Tax Return – I have yet to understand it (well, I get to some understanding before completion of each Return, but my brain promptly shuts down on the whole ghastly ordeal, and I enjoy a year’s respite before having to work it all out again.) I'm sure it was, Nigel. I've no figures for it, and I wouldn't know where to start looking for any, but I seem to remember that back in the 1960's and 1970's 'water sales', and I think some sort of drainage charges/dues, were spoken of and generally regarded as one of BWB's main sources of income. This is something that sticks in my mind through being told by one of BWB's senior engineers that they made more money out of water sales from their little used and semi-derelict canals every year than they ever did out of collecting tolls and having to maintain the commercially used rivers and canals up to the standards demanded by - "you people and your fucking commercial boats".
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