Mar 20, 2013 ... VAT thing you do. Andy Rogers – Director KPMG y g. Phil Mattacks - HMRC ....
Section 106. □ Barter agreements g. □ Community Centres. 11.
KPMG Tax Session VAT thing you do Andy y Rogers g – Director KPMG Phil Mattacks - HMRC National Housing Federation Warwick Finance Conference 20 March 2013
“Golf is a game whose aim is to hit a very small ball into an even smaller hole with weapons singularly ill-designed for the purpose purpose”. Winston Churchill
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Agenda
■The Cost Sharing Exemption ■Partial Exemption Framework update ■VAT Risk Areas
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Cost Sharing Exemption – a reminder of the requirements Independent group of persons ■ HMRC require a CSG to be a separate entity from, but owned by, its members but the CSG may be under majority j y ownership p of one of its members and could be VAT g grouped p
Members must make exempt/non-business supplies ■ 5% of the members activities must be VAT exempt or non-business
Directly necessary services ■ HMRC will accept that all services received by a member from a CSG may be treated as directly necessary and, therefore, VAT exempt if more than 85% of the member’s activities by value are exempt or nonbusiness (or if the member restricts more than 85% of VAT incurred)
Services supplied at cost ■ A CSG must not make a profit or a loss but may carry cash surpluses/deficits
Distortion of Competition ■ HMRC consider that the provision of services by a CSG on a cost and VAT free basis does not in itself result in a distortion of competition p
Must receive qualifying supplies ■ The HMRC guidance included a further condition that all members must receive supplies that qualify for the CSE CSE. © 2013 KPMG LLP, a UK Limited Liability Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. All rights reserved.
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Cost Sharing Groups – Structure 1 VAT Group
HA1 Member
OTS HA2 Member
Exempt
HA3 Member
CSG
Exempt
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Cost Sharing Groups – Structure 2
Before
VAT Group
HA 1
HA 2 Member
HA 3 Member
Sub co
HA 4 Member
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Cost Sharing Groups – Structure 3
After
VAT Group
HA 1 Member
HA 2 Member
Subco. HA 3 Member
CSG HA 4 Member
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Cost Sharing Groups – Structure 4 VAT Group
HA 1 Member
HA 2 Member
Subco. HA 3 Member
CSG HA 4 Member
New HA 5 Member
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Definition of cost and HMRC ■ Direct costs ■ Direct ec overhead o e ead costs cos s ■ Indirect overhead costs ■ Estimation ■ Commerciality ■ Competitive p bid ■ Internal guidance to visting VAT officers
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VAT Risk Areas
■Coding ■Developments
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Developments ■ Golden brick ■ Disapplication sapp ca o o of op option o to o tax a ■ Section 106 ■ Barter agreements g ■ Community Centres
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Case study
LOCAL AUTHORITY land • no planning permission • Section 106 – Community Centre on HA land
Community Centre land and lease on lock ups
HA
Design and Build Company
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Affordable rent
Shared ownership
Outright sale
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Case study SELLER
OPTED LAND
HA
•Commercial buildings •Barter transactions •Overage payments
Affordable land
DESIGN AND BUILD SERVICES
HA sub co. non charitable
JV developer / builder
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OPEN MARKET SALE
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Case study
SELLER Opted land
disapplication pp HA Charitable
Subco (N charitable) (Non h it bl )
Open market sale
VAT group
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“The more I practice, the luckier I get” Gary Player
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KPMG VAT Contacts At the NHF Finance Conference:
Other Social Housing VAT specialists include:
John Rippon – National
[email protected] 0151 473 5197
Tom Hudson – London & South
[email protected] 020 7311 3887
Andy Rogers – National
[email protected] 01293 652078
John Hart – London & South
[email protected] 020 7311 3248
Graham McKay – London & South
[email protected] 01293 652172
Keith Cardy – North
[email protected] 0113 231 3956
Gareth Blower – London & South
[email protected] 01293 652768
Louise Phillipps – North
[email protected] 0191 401 3888
Joanne Birkinshaw – Midlands & Wales
[email protected] 0121 232 3397
Andrew Norris – Wales & South
[email protected] 029 2046 8024 Adrian Wood – Scotland
[email protected] 0141 300 5709
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