Unbelievably, Industry still waits for HMRCâs revised guidance on VAT

Earlier this year I reported on the discussions that the DMA and the Charity Tax group had been having with HMRC about how services should be treated in respect of VAT if they were supplied with zero rated print.

We had agreement on a number of important areas including an undertaking from HMRC that they would not be taking retrospective action against companies that had applied VAT incorrectly in the past and clarification in some areas about how to proceed from 1^st April 2015.

I had hoped that the DMA would have been able to publish guidance for members that detailed exactly what they should – and shouldn’t – do. To be able to do this, however, we need to make sure that it is completely consistent with what HMRC are saying in their own revised guidance – which is where the problem lies because it has still not yet been published!

Although HMRC had originally stated that they aimed to publish the revised guidance in “the new year” – which would have given the industry sufficient time to make necessary changes before the implementation date of 1^st April 2015 we only saw a first draft for comment on the 16^th March. We had a number of problems with both the content – some of which was factually inaccurate – and the wording of the draft guidance and responded to HMRC on the 20^th March with our comments. HMRC have now said that they have entered “purdah” (a 6 week pre-election period when local and central government cannot make any announcements or start initiatives that might be seen to help a political party) and cannot comment or meet until after the election.

We believe that this position is totally unacceptable and that HMRC cannot implement this change when it has not yet published any revised guidance or communicated its intentions publicly. Although DMA and CTG members should be aware of what is happening through their Trade Association there has been no formal notice from HMRC to the industry.

Both the DMA and CTG will continue to press HMRC for a meeting and publication of revised guidance because we believe that it falls outside of “purdah” restrictions and will be writing to the new Treasury Minister after the election to make sure that no-one is penalised as a result of HMRC’s failure to publish revised guidance.

We have already achieved a great result for the industry in what has been agreed so far and it is frustrating that what should be a simple job of “crossing T’s and dotting I’s” should be taking so long but we do need to ensure that we get the details right to avoid any misunderstanding in future.