BUSINESS BRIEF 09/2002

28 Mar 2002 02:43 PM

(1) VAT Civil Evasion Investigation: A New Approach.

(2) Land and Property - New & Revised Notices and Policy Clarification.

Business Brief number 09/02 28 March 2002

(1) VAT CIVIL EVASION INVESTIGATION: A NEW APPROACH

This Business Brief announces a new approach to tackling some VAT civil evasion cases, which will run parallel to the current system. Following on from a year long trial these new procedures will be adopted nationally, for all suitable cases, with effect from 1 April 2002.

Background

In Business Brief 11/00, issued on 1 September 2000, Customs announced the start of a year long trial of a new approach to VAT civil evasion investigations. The trial took place in what were the Collections of East Midlands, London, the North West and a team within the former London National Investigation Service.

The aim of the new, less adversarial approach is to reach agreement on the nature, extent and reason for VAT irregularities with the taxpayer or their taxation/legal adviser. Meetings are held rather than formal taped interviews and, where the taxpayer agrees to co-operate, no investigation will be undertaken during the disclosure process.

Evaluation

The evaluation of the trial gave clear confirmation that the new approach is a more effective and cost efficient way of dealing with a significant number of VAT evasion cases. The trial also increased the number of cases investigated jointly between Customs and the Inland Revenue. Feedback from major accountancy firms strongly supported a national rollout and suggested it was the overall package of a reduced penalty, a less adversarial approach and time to pay that is encouraging taxpayers to adopt and comply with the procedures.

In summary the evaluation found that the new approach more than doubled the amount of arrears paid within three months, increased case handling capacity and resulted in no appeals to the VAT and Duties Tribunal.

National rollout

From 1 April 2002 the new procedures will apply to suitable VAT cases. In preparation for this, the procedures have been reviewed and updated, guidance has been revised and issued and investigators from around the country have been trained.

A Press Release has also been issued and all VAT-registered traders will be notified via a leaflet sent with VAT returns over the next three months.

Further information

A Statement of Practice in the form of VAT Information Sheet 01/02 will be available on the Department's Internet site from 1 April 2002. This cancels and replaces VAT Information Sheet 04/00. It sets out the new procedures in some detail and is intended to provide a clear explanation of how the new procedures will work.

A revised Addendum to VAT Notice 730 has also been issued and will be available on the Intranet site. This cancels and replaces the Addendum of September 2000.

Paper copies of these will also be available from the Customs & Excise National Advice Service on 0845 010 9000 and each VAT Business Advice Centre.

MEDIA ENQUIRIES ONLY TO THE HM CUSTOMS & EXCISE
COMMUNICATIONS DIVISION, 5E, NEW KINGS BEAM HOUSE, 22 UPPER GROUND, LONDON SE1 9PJ. TEL: 020 7865 5095/5010/5715. TO CONTACT THE DUTY PRESS OFFICER OUT OF HOURS PLEASE CALL 020 7620 1313.

(2) LAND AND PROPERTY - NEW & REVISED NOTICES AND POLICY CLARIFICATION

This Business Brief article highlights the issue of a new Notice 742A Opting to tax land and buildings and revised versions of Notices 742 Land and property and 709/3 Hotels and holiday accommodation.

New Notice 742A Opting to tax land and buildings

This new Notice provides additional information and clarifies our policy relating to the scope of an option to tax, input tax, transfers of going concerns and anti avoidance measures. This follows the review of option to tax policy announced in Business Brief 16/99, and consultation with the trade. It also sets out some minor changes to the conditions for automatic permission to opt to tax to try and give greater certainty to businesses.

The review of policy considered the impact of the judgment of the House of Lords in the case of Card Protection Plan, C-349/96 detailed in Business Brief 2/2001. We believe this judgment does not affect the treatment of the option to tax in relation to combined commercial and residential buildings such as public houses.

To assist business we are also introducing a new Notification Form VAT 1614 which you can obtain from the National Advice Service on 0845 010 9000. Completed notification forms should be sent to your local VAT office.

Full details of these changes can be found in a new notice - 742A Opting to tax land and buildings which was published on 7th March 2002.

Revised Notice 742 - Land and property

Notice 742 has been revised and re-written. This new edition, published on 7th March 2002, incorporates Notices 742/1 Letting of facilities for sport and physical recreation, 742/2 Sporting rights and 701/24 Parking facilities. Old copies of these notices should be destroyed.

Revised Notice 709/3 - Hotels and holiday accommodation

Notice 709/3 has been revised and rewritten. The revised notice, which was published on 7th March 2002, clarifies the treatment of hotel conference facilities. Old copies of this notice should be destroyed.

We are now working on revisions to our Internet guidance to reflect these policy changes. In the interim, if you find inconsistency between a notice and other Internet guidance, the text in the notice will take precedence. Please contact the National Advice Service if in doubt.

All these notices will be available on the Customs website www.hmce.gov.uk or from the National Advice Service 0845 010 9000.

MEDIA ENQUIRIES ONLY TO THE HM CUSTOMS & EXCISE
COMMUNICATIONS DIVISION, 5E, NEW KINGS BEAM HOUSE, 22 UPPER GROUND, LONDON SE1 9PJ. TEL: 020 7865 4775/5472. TO CONTACT THE DUTY PRESS OFFICER OUT OF HOURS PLEASE CALL 020 7620 1313.

This business brief and other information about HM Customs & Excise can be found at our website: www.hmce.gov.uk