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:

Exempt:

The Money Trap

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

Business gifts

D.o.T. testing of road vehicles

Zero rate:

Construction services applied to listed buildings

Goods sold or leased to charities

Freight transport

Special valuation provisions:

Secondhand goods

Long-stay hotel accommodation

Food & drink supplied to employees

5%:

Installation of heating equipment

Alterations to buildings that result in additional living accommodation

Renovation of unoccupied houses

Extra-statutory concessions:

Goods supplied to NATO forces

Goods sold by auction

Imported works of art

Bad debts

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.