Just when you thought HMRC were going to do the decent thing and simplify their tax systems and rules for the greater good, they bring out new, far more strict guidelines. It looks like government bodies who want to reclaim VAT back from the tax man for big IT buys will face stricter rules than ever from April.
The 1994 VAT Act amended to suit
The latest changes in a long, tiresome string of tax changes will be made law through an amendment to the 1994 VAT act, and thankfully it only affects ‘central government bodies’ and the National Health Service this time.
At the moment government bodies can claim back VAT on a variety of services after invoicing. But the recovery rules will change from 1st April, and the timescale within which the VAT claw-back can be claimed is going to be significantly narrowed, leaving only a teeny, weeny window of opportunity.
Tough VAT deadlines for government bodies? Welcome to our world…
The move looks set to add a great deal of pressure onto already struggling government bodies who want to claim back money on invoices sent at the end of this financial year. Oh dear. How dreadful for them. Welcome to our world!
One anonymous NHS Trust manager claimed the extra work will pose an administrative problem, and said there might be ‘major revenue leakage’ if government bodies don’t get their acts together in time. The solution? It looks like they’ll have to get themselves organised, just like the rest of us, and make sure they tackle everything in good time.
Will we ever see the tax and VAT admin burden reduced?
As you can imagine, IT services form a large part of many government departments’ budget, and the departments in question are not happy about the changes. On the bright side the overall VAT picture is slightly better for government bodies these days, who can claim back VAT on a wider range of services than ever before. On the downside the payback is yet more admin, an ongoing paperwork nightmare of a dilemma that HMRC seems completely unable to crack.
Get your VAT sorted early
If you’d rather hand over the whole VAT thing to someone else, feel free to send it our way. We’ll do a top job for you, and we’ll save you acres of paperwork.