VAT Package March 2010

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Meredith Pitts
6 years ago
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1 VAT Package March 2010 On 1 January 2010, the EU introduced a package of changes to the VAT rules that affected Law Firms. The VAT Package has resulted in significant change to all Law Firms with establishments and clients in the EU. Law Firms need to be compliant with the new regulations in order to avoid potential penalties for incorrect reporting and accounting.

2 Changes ESL Completion Assistance The changes reformed the rules for determining the application of VAT for businesses that supply or purchase services, as well as introducing new monthly VAT reporting obligations (quarterly in the UK) with the submission of EC Sales Lists (ESL) for services. Those affected should be addressing the issues arising from the introduction of the VAT Package so that their accounting systems are reconfigured to report and account for the transactions at the right time. We provide a range of services to assist with the new VAT reporting obligations and transition to the new place of supply legislation such as: Level 1 step by step basic assistance in completing the ESL by reviewing the information to be declared on the form Level 2 a more in depth analysis of the figures to be declared on the ESL by tracing a sample of the figures through the accounting and VAT reporting systems Level 3 as 1 and 2 but would also include selection of some transactions to review the place of supply of the services, inter-office transactions and identifying ways in which your ESL burden could be reduced. Global - manage the whole ESL compliance process for you on a territory by territory basis using PwC s Global Network.

Changes Place of Supply Review Identifying those services that will be affected by the new tax point rules for services on a territory by territory

3 Changes Place of Supply Review Identifying those services that will be affected by the new tax point rules for services on a territory by territory basis. Review the international services you provide and the associated VAT treatment to identify the potential impact of the VAT package on your firm.

4 VAT Return From 1 April 2010, all businesses with an annual turnover greater than 100,000 will be required to file their VAT returns online. Law firms (and if applicable, their agents) will need to register with HMRC to obtain activation codes and passwords etc for efiling.

5 VAT and Business Entertainment an opportunity The Advocate General recently delivered an opinion in the joined Dutch cases of X Holding BV and Oracle Nederland BV (C-538/08 and C-33/09). The opinion indicates that, where an input VAT 'standstill blocking' provision does not define sufficiently closely the nature of the specific goods and services in respect of which recovery is precluded, the provision may not be compliant with the requirements of the EU legislation, in which case the 'blocking' of input VAT may be ultra vires. In the UK, the 'blocking' of input VAT in respect of business entertainment (art 5 VAT (Input Tax) Order 1992) is drafted in terms similar to those of the Dutch national legislation in question. Consequently, if the ECJ should follow the Advocate-General's opinion, UK businesses may be entitled to retrospective recovery from 1 April 2006, and should consider protecting their position by submitting claims or extending existing claims to recover input VAT on business entertainment, along with interest.

6 PricewaterhouseCoopers team of partnership tax and VAT specialists has extensive experience of advising law firms. If we can assist your firm with the issues outlined in this bulletin please contact one of specialists listed below, or your usual PricewaterhouseCoopers contact. Stephen Coleclough Keith Lawson This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent entity

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