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  1. #1

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    Default Tax Tribunals : VAT Flat Rate Scheme and Bank Interest

    Tax Tribunals : VAT Flat Rate Scheme and Bank Interest

    Thexton Training Ltd case TC00919
    The Finance & Tax Tribunal

    February 14, 2011

    Following the Thexton Training Ltd case, the treatment of interest received by a business operating the flat rate scheme has changed. Where bank interest paid as a core part of the business activities the interest should be included in the turnover for the flat rate scheme. However, where the interest is received as a passive activity, such as on a current or deposit account it is outside the scope of VAT and should not be included in the turnover for the flat rate scheme.

    If you have included bank interest in your turnover subject to the flat rate you can make a claim for refund of the VAT paid within the last four years. Ask one of our VAT experts if you need some assistance with this claim.

  2. #2

    Fingers like lightning

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    Thanks for the share. It was heard last year but the decision only release recently. IMO It's very interesting but perhaps it may be worth waiting to see if HMRC take it further to the Upper Tier Tribunal before starting any VAT refund claim.

  3. #3

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    Crikey that could end up as a lot of claims!!! How many 100's of thousands of companies are on the FRS?

  4. #4

    I live on CUK

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    This should be a sticky and on the front page of the site.

    BTW thanks

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    Hmmm, I hadn't been including the bank inrerest in my FRS figures anyway. All 16p a month of it. But you pay corporation tax on it anyway.

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    Quote Originally Posted by Craig@InTouch View Post
    Thanks for the share. It was heard last year but the decision only release recently. IMO It's very interesting but perhaps it may be worth waiting to see if HMRC take it further to the Upper Tier Tribunal before starting any VAT refund claim.
    Do you think they will go the upper tier, when will people know ?

    A could of days ago I paid my VAT with an adjustment included for not paying the FRS vat on the interested recieved back to Oct 2009, its only around 120 but I want back if I can ?

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    Either party can apply for "permission" to appeal within 56 days of the decision so it could go on a bit

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    Just an update for everyone on this - I spoke to HMRC VAT Expertise people today who tell me that they are still waiting to hear if HMRC are going to appeal the decision, so at present their existing advice to include it as turnover still stands. This was backed up by a professional tax course I attended this morning too.

    We will keep an eye out for Business Briefs issued by HMRC to see how they intend to proceed.

    It's also worth noting that this case applies to passive interest on a business account. If the whole purpose of money being put into an account is to gain interest then it's a potentially different story. Again, we can clarify when we know more from Hector himself.

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    Quote Originally Posted by Clare@InTouch View Post
    It's also worth noting that this case applies to passive interest on a business account. If the whole purpose of money being put into an account is to gain interest then it's a potentially different story. Again, we can clarify when we know more from Hector himself.
    Ahh, that is just fabulous. Don't you guys just love those beautiful, subtle shades of grey in our taxation rules.


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    Quote Originally Posted by Wanderer View Post
    Ahh, that is just fabulous. Don't you guys just love those beautiful, subtle shades of grey in our taxation rules.

    It keeps us on our toes......In my opinion, I'd be very surprised if they don't appeal.

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