Our view on recent updates from Irish Revenue and EU Commission
Our view on recent technical publications, guidance and recent updates on Indirect Tax from the Irish Revenue Commissioners and the EU Commission.
Help to Buy (HTB) Incentive
The Help to Buy (HTB) incentive, introduced in budget 2017, is designed to assist first-time buyers with obtaining the deposit required to purchase or self-build a new house or apartment to live in as their home. The Incentive will provide those who are in the residential property sector, including property contractors, with an opportunity to entice first time buyers, when bringing properties to market.
The Deloitte Indirect Tax team has experience in registering developers as qualifying contractors for the HTB incentive. To find out more contact Alan Kilmartin.
Revenue Audit and other Compliance Interventions (Revenue eBrief No. 23/17)
The Code of Practice for Revenue Audit and other Compliance Interventions, effective from 22 February 2017, sets out guidelines to be followed by Revenue, taxpayers and tax practitioners in carrying out of Revenue Compliance Interventions.
The code covers a wide range of tax heads including Corporation Tax, VAT, RCT, Stamp Duties, Customs Duties and etc. The primary objective of Revenue Audit and Interventions is to promote voluntary compliance with tax and duty obligations.
Our Indirect Tax team has significant experience dealing with Revenue Audits for clients in various industries.
Contact us for assistance dealing with Revenue audits or other interventions, queries etc. Please contact Alan Kilmartin.
Apportionment for dual-use inputs (Revenue eBrief No. 01/17)
Businesses are entitled to deduct input VAT incurred which is related to taxable supplies made and/or any qualifying activities. Where a business is engaged in non-taxable (exempt) activities there is no entitlement for recovery of VAT on costs incurred exclusively in relation to such supplies. When a business makes both taxable and exempt supplies and incurs costs covering both activities a portion of the VAT incurred can be recovered. The proportion of deductible VAT is usually calculated based on the ratio of turnover from deductible supplies and activities to the total turnover of the business.
There are a number of different methods which can be used to correctly calculate the recoverable amount. An Annual Review should be carried out on the amount recovered and the methodology used.
Flat Rate Addition (Revenue eBrief No. 01/17)
The Flat-Rate Addition is essentially a scheme available to ‘Farmers’ who are not registered for VAT to compensate them for not being able to recover VAT on their purchases. The Flat Rate addition increases payments by VAT registered businesses to a non VAT registered farmer by 5.4 percent w.e.f. 1 January 2017, previously 5.2 percent.
Revenue has also introduced new restrictions which can apply giving the Minister for Finance the power to make an order that the “flat rate addition” shall not be payable in respect of certain transactions in a particular agricultural sector.
Exchange Rates to be used in Determining Customs Values
Irish Revenue regularly publish a comprehensive list of exchange rates to be used in Determining Customs Values, the link above provides the March 2017 rates.
Updates to the eRCT System (Revenue ebrief no. 18/17)
Relevant Contracts Tax (RCT) is a withholding tax which should be operated by Principal Contractors and operates in a number of sectors. In December 2016, the RCT system was updated to include more functionality such as a facility to look up Payment Notifications and input or check details of unreported payments on a closed contract up to 18 months after the end-date of the contract.
For any queries in relation to RCT please contact Alan Kilmartin.
VAT exemption on educational and vocational training (post FA 2015)
Finance Act 2015 made a number of amendments to the application of the VAT exemption which applied to certain educational services and vocational training. Revenue stated at the time that the amendments should not have any significant impact, however, we would not agree with Revenues initial view.
We are represented on the Tax Administration Liaison Committee (TALC) which has been in discussions with Revenue on the issue. Revenue are currently drafting an updated leaflet which will contain their position with detailed explanations of relevant technical terms, criteria to be met to be a qualifying training activity and relevant examples in relation to qualifying training bodies and the application of the VAT exemption to training activities in various scenarios.
VAT Digital Single Market package
In order to achieve better facilitation of cross border trade within the EU, minimise fraud and ensure fairer competition for businesses at an EU level, the European Commission had adopted and published a VAT Digital Single Market package in December 2016 to include the adoptions of the E-commerce Directive, Implementing Regulations, the Administrative Co-Operation Regulation and the E-publications Directive.
With regard to the VAT E-Commerce proposal, the first reforms are expected in 2018. The other measures are expected to come into place in 2021 as IT systems need to be developed. It is envisaged by adopting the Single Market package, businesses will gain through a substantial reduction in cross border VAT compliance costs and EU Member States will gain through an estimated increase in VAT revenues of EUR 7 billion annually.
For more detail on the planned changes please contact Jane Hallinan.
Transfer of Business
The current consensus of opinion of the Tax Administration Liaison Committee (TALC) is that a vacant property is essentially an asset rather than a business. Therefore, a vacant property which had been previously let or which had been used as part of a ceased business should not come within the TOB provisions. A timeframe for the period of letting or the period of vacancy prior to transfer could be considered if TOB rules were to continue to apply to vacant properties. More detail is to be revealed in the ITI VAT textbook which is due for publication soon.
Revenue Opinions and Confirmations
Revenue has published detailed guidelines advising that an opinion/confirmation will only be provided by Revenue where the issues are complex, information is not readily available or there is genuine uncertainty regarding the tax implications of a transaction.
More importantly Revenue has stated that opinions/confirmations issued by Revenue are subject to a maximum validity period of 5 years, or such shorter period as may have been specified by Revenue when providing the opinion/confirmation.
To continue relying on any Revenue opinions/confirmations that were issued more than 5 years ago, action is required immediately to have the opinion/confirmation extended.