Springfords LLP blog

Some news, views and comments about everything and anything, relevant and irreverent.

1 April 1973

15 April 2013

Forty years on and VAT is alive and well.  In just a generation, VAT has become one of the most important sources of revenue for the UK Exchequer.  But the date of introduction should have given some sort of clue to the fun and games that it would give rise to as we all got to know, and love, VAT.

The notion of the sales tax that became VAT seems to have emanated across the Channel with our neighbours in France and adoption was one of the conditions attached to Britain’s entry into the EEC in the time of Heath’s Government.  Those with longer teeth, or just better memories, will recall a flat rate of 10% being charged on everything other than luxuries – petrol and, for a time, electrical appliances came into the 'luxury' category then would you believe.

Mr Heath did his level best to maintain a pledge while in opposition that key essential items would not be subject to VAT.  Books and food are two examples of what he wanted to keep VAT away from.  But it’s the latter that has given rise to much bemusement as we have tried to rationalise HMRC views, Tribunal verdicts and Court decisions.

We have had to contend with rules that treat snacks as non-essential.  Peanuts?  Shell them yourself and save VAT.  Jaffa Cakes?  Chocolate-covered snacks that warrant the addition of VAT?  Not so.  Eat in or takeaway?  Heated or just being kept hot?  These are just some of the issues that have occupied VAT minds over the years.  Some have been resolved to the understanding of the man on the street.  Other conclusions remain jaw-dropping.

Speaking of which, one of the latest decisions to hit the streets concerns the medals presented to the winning teams in each of the First, Second and Third Divisions of the Scottish Football League.  HMRC contended that VAT had to be accounted for on the value of these medals.  And now the Upper Tribunal has agreed that the award of medals constitutes a supply of goods that is subject to VAT.  With 20 medals, each to a value of £450, being awarded to the top team in each of the three divisions that’s sure going to help offset the bad debts HMRC may be incurring elsewhere in football!

HMRC 1 – 0 SFL

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springfords blog

Some news, views and comments about everything and anything, relevant and irreverent.

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