Weekly VAT News

RCB 3 (2024): VAT on cladding remediation work

HMRC have published Revenue and Customs Brief 3 (2024) on VAT on cladding remediation work, together with an accompanying Help with VAT treatment of remedial works — Guidelines for Compliance GfC11. The RCB deals with the deduction of VAT incurred on cladding remediation work carried out on existing residential buildings. HMRC consider that remediation work undertaken after the completion of construction qualifies as ‘snagging’ if the work carried out is sufficiently linked to the initial construction. If the initial construction was subject to VAT at the reduced or zero rate, the snagging work will also be subject to the reduced or zero rate. Otherwise, remediation work will be subject to VAT at the standard rate. VAT incurred on snagging work will be recoverable, subject to the normal rules. If remedial works are not part of the original construction, the VAT incurred may still be potentially recovered, where there is a direct and immediate link to the general business activity. The GfC provides more detail on the VAT treatment of remediation works, including HMRC’s policy on what constitutes snagging, and includes examples of how to apply HMRC’s rules on the VAT treatment of remediation work and the recoverability of input tax incurred. (Contact: Ben Tennant)

Safety and security declarations for imports from the EU

From 31 January 2025, safety and security declarations will be required for imports from the European Union into Great Britain. The declarations are the final step in the implementation of the Border Target Operating Model, following the introduction of health certificates on 31 January 2024 and the imposition of physical checks on 30 April 2024. HMRC have updated their guidance on Preparing for the new safety and security declaration requirements to include an explainer video and specific information for intermediaries and customs agents, hauliers and carriers, and importers. HMRC have said that they will continue to publish further information on this guidance page in the coming weeks. (Contact: Sam Kiely)

 Alcoholic products technical guide

From 1 February 2025, new rules will apply to alcohol duty, regarding approvals, returns, and payments. In advance of the application of the new rules, HMRC have published the alcoholic products technical guide to explain “the effects of the law and regulations covering the production, storage and accounting for duty on alcoholic products. It is intended for commercial producers, packagers, importers and exporters of alcoholic products.” The guidance, parts of which will have the force of law, includes definitions, approvals, accounting for duty, returns and payments, record-keeping, and the storage and movement of alcoholic products. (Contact: Eleanor Caine)

Digital platform reporting – Registration open

With effect from 1 January 2024, the UK implemented the Organisation for Economic Development (OECD) reporting rules for digital platform operators in the UK. The rules require in-scope UK digital platforms to collect information, and report to HMRC annually, on the income of sellers (in the UK and partner jurisdictions) using their platforms to provide personal services, sell tangible goods, and rent out immoveable property or transport. The first reporting of data is due by 31 January 2025. On 30 December 2024, HMRC opened the registration for digital platform reporting. HMRC also issued guidance on the registration process and guidance on managing digital platform reporting. (Contact: Kate Ramm)