Potential overpayments of output tax
A number of reliefs are not widely known and the default rate of 20% kicks in because the taxpayer was not aware of the relief.
Here are just a few examples:
Goods upon which no input tax was allowable
Admission to art exhibitions or musical performances by certain organisations
Certain works of art
Outside the scope:
Goods transferred as assets of an ongoing business
D.o.T. testing of road vehicles
Construction services applied to listed buildings
Goods sold or leased to charities
Special valuation provisions:
Long-stay hotel accommodation
Food & drink supplied to employees
Installation of heating equipment
Alterations to buildings that result in additional living accommodation
Renovation of unoccupied houses
Goods supplied to NATO forces
Goods sold by auction
Imported works of art
If you have been unlucky enough to have a customer fail to pay, you can at least recover the VAT you charged from HMRC, but HMRC have not made this easy. This is due to anti-avoidance provisions introduced to counter some sharp practice that has gone on in the past. It does make it difficult for the honest taxpayer, but such is life.
In each case CONDITIONS APPLY! These can be very involved and it is easy to miss out on the relief over some missing paperwork or a slightly incorrect description of the work done.
The full list of reliefs is endless and entrenched in some 2,750 pages of fine print and huge volumes of caselaw. HMRC will always say "VAT is a self-assessed tax" and leave the onus upon the taxpayer to find out if relief is available.