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Dermot O’Brien & Associates is Ireland’s leading independent VAT consultancy firm.

Our experienced team provide expert advice in relation to VAT and Relevant Contracts Tax issues.

At Dermot O’Brien & Associates, we listen to our clients’ needs, understand their business objectives and provide quality advice and solutions that add value to their operations.

We help the businesses we advise achieve positive growth, make major cost savings and resolve complex issues in an efficient and effective manner.

Now is the Time to Resolve Your Dispute with Revenue

Under new tax appeals legislation, Revenue are obliged to afford every taxpayer with an open appeal the opportunity to settle their case with Revenue directly, and avoid the cost and uncertainty of the appeal hearing.  With over 3000 open appeals, Revenue are in for a busy Summer.

Requests for an opportunity to settle with Revenue must be filed shortly.  Any taxpayer not seeking a settlement opportunity by 1 June 2016 will have their case referred automatically by Revenue to the Appeal Commissioners for hearing.

We, at Dermot O’Brien & Associates, have decades of experience in Dispute Resolution with Revenue.  If you would like to avail yourself, or your client, of that experience, please call 01 708 0080, or email dermot@dermotobrien.biz or gabrielle@dermotobrien.biz.

Appeal Commissioner decision

At a recent hearing by the Appeal Commissioners, we succeeded in overturning a VAT assessment by Revenue whereby Revenue sought to tax at the standard rate of VAT (23%), the sale by our client of bespoke chairs which were designed and built for people with spinal injuries or deformity.  The Appeal Commissioner agreed that the chairs were orthopaedic appliances and, hence, subject to zero rate VAT.

Transfer of Business Relief

revenue1The Revenue Commissioners published an updated Information Leaflet on Transfer of Business Relief (section 20(2)(c) and 26(2) VAT Consolidation Act 2010) on 10 July 2014. Key changes have been made to paragraph 10.6 of the leaflet in relation to the transfer of let properties. For more detail, please read the attached leaflet. Click here.

Finance (No.2 ) Bill 2013

The Minister for Finance, Michael Noonan, TD, published the Finance (No.2) Bill 2013 this afternoon.  In a Bill comprising some 100 pages, he felt the need to allocate all of five pages to VAT.   Our summary of the VAT changes proposed in the Bill is, as a consequence, a short piece of work. The principal proposed changes are as follows:

 

9% Rate

 The tourism industry lobbied hard, pre-Budget, for the retention of the temporary 9% rate and their efforts bore fruit.  The Finance Bill removes the temporary nature of the rate by deleting the time limit of its application.  The rate would appear to be here to stay. And a good thing too.

 

Claw-back of Tax Deducted

 This was announced in the Budget as a VAT anti-fraud measure.  In essence, it seeks to force a taxpayer to repay to Revenue, VAT which they have previously reclaimed if they have not paid their supplier for the goods or services which gave rise to the VAT credit within 6 months of the time when the VAT was reclaimed.  This is to be effective from 1 January 2014.

Seasoned VAT watchers will recognise a problem waiting to happen from at least 100 paces.  Here, boys and girls, is one such problem-in-waiting.  Firstly, what happens if the supplier has paid the VAT to Revenue (as he is obliged to do if he accounts for VAT on the invoice basis)?  Revenue would have the VAT from the supplier, but wish to claw it back from the purchaser.  It is a proposal which flies in the face of the first principles of VAT and would unjustly enrich the Exchequer.  In all likelihood, it is beyond the scope of Articles 167 and 167a of the principal EU VAT Directive.

And I do not want to hear the cynics among you say that the Directive only applies when it is in the favour of Revenue.

Revenue may – and will need to – publish regulations to give this provision effect.  It would seem, in the interest of equity at least, that bad debt relief must be available to a supplier immediately where he has paid VAT to Revenue and a purchaser of goods or services from him has had that VAT clawed back.

 

Cash Receipts Basis

 Good news for the SME’s.  The Bill confirms the Budget announcement that a business with an annual turnover of less than €2 million will be entitled to account for VAT on the cash basis.  This becomes effective from 1 May 2014.  It will help a lot of small businesses as it represents an increase of 60% on the current threshold.

 

Flat Rate Addition

 From 1 January 2014, the unregistered farmer will get a flat rate addition of 5% (up from the current 4.8%) on sales of agricultural produce to registered buyers.

 

Horses and Greyhounds

 Following infraction proceedings taken successfully by the EU Commission against Ireland in relation to the application of VAT to transactions involving horses and greyhounds (i.e. the Commission said we were not entitled to apply the 4.8% rate to non-food producing creatures), changes have had to be made.

So, unless it is for eating, a horse is no longer classed as “livestock” and such sales are liable to VAT at 9% from 1 May 2014.  Similarly, greyhound sales will be taxed at 9% from then also.  Thankfully, the Bill does not suggest that greyhounds may be used “in the preparation of foodstuffs”.

The provision does present the prospect of a VAT-saving opportunity, however.  If your nag is in the 3.15 in Fairyhouse and is trailing in a thousand lengths behind the winner, you might still be able to benefit from the 4.8% rate if you sold said nag for a different purpose………….

 

On that note, have a Happy Hallowe’en.

Dermot O’Brien

24 October 2013

Place of supply of storage services

Minister Finansów v RR Donnelley Global Turnkey Solutions Poland sp. Z o.o. (C-155/12)

Advocate General Kokott delivered his opinion in this case on 31 January 2013. The point at issue was whether the service of storing goods constituted a supply of property related services (the place of supply is where the property is located); or was the supply covered by the general business to business rule (the place of supply is where the recipient is established)?

The Court has ruled previously that in order for a service to be a property related service, there must be a “sufficiently direct” connection between the service and the property. The Advocate General opined that it was compelling to regard the actual storage of the goods as the principal supply and the admission, placement, issuing etc of the goods as ancillary supplies, on the basis that the latter are not an end in themselves, but are to facilitate the storage of the goods.

The Advocate General, in considering the place of supply, indicated that the Court should follow the proposal of the referring court that “a sufficiently direct connection between a service and immovable property should be found if specific immovable property is the subject matter of the service”. In summary, the AG indicated that the supply of storage services can display a sufficiently close connection with property “only if it is linked with a right to use a specific property or a specific part of a property. Only then is the subject matter of the service the immovable property itself”. If this link is not present, then the subject matter of the supply is merely the goods to be stored. The full judgment can be found by clicking here.

VAT Groups

European Commission v Ireland (C-85/11) – VAT Groups.

The ECJ published its decision on 9 April 2013 in this case which concerned the Irish VAT grouping rules, in particular, the admission of non-taxable persons as members of a VAT group. The EU Commission requested the Court to declare that Ireland failed to fulfill its obligations under the VAT Directive (Articles 9 and 11) by allowing non-taxable persons to be members of a VAT group.

The Court held that it could not be inferred from the words ‘as a single taxable person’ that Article 11 of the VAT Directive only allows a number of taxable persons to be dealt with as a single entity. The wording used relates to the outcome of the provision rather than being a condition of the provision. The Court held that “it is not apparent from the wording of Article 11 of the VAT Directive that non-taxable persons cannot be included in a VAT group”. To access the full judgment, click here.

BUDGET 2014

Some key VAT and related matters, of a positive persuasion, which caught the eye in Minister Noonan’s Budget speech today:

  •  9% VAT rate is to stay.
  • Annual turnover threshold for accounting for VAT on cash basis is being increased to €2m.
  • Study to be carried out with a view to reforming the appeals system.

And some more of the “same old, same old”:

  •  Yet more Revenue powers to be introduced, including anti-VAT fraud measures.
  • The quality of the VAT consultant’s Friday night red takes yet another nosedive after another 50 cent is added to the excise duty on a bottle of wine.
  • Farmers’ flat rate addition is raised to 5%.