The layout of invoices for the provision of Serviced Accomodation...

We recently had a call from a client saying that their tax department had picked up on the layout of our invoice. They claimed that now all invoices in respect of serviced accomodation had to show the accomodation componant seperately to the service element. They believed that for the first 28 days the invoice should indicate that the entire stay is made up of service and thus attracts vat at 17.5% on it's entirety. After 28 days the invoice should show that 80% of the invoice is in respect of property rental and 20% in respect of service and thus only the service element would attract the vat but obviously at 17.5%.

This is a bore for us changing software etc but that is not so much my worry that it is setting a precedent to consider/debate what % element of the provision is service. i.e. could the revenue argue that on a £1000pw invoice in respect of an apartment that would normally be £400.pw on a long let, the service componant is in fact £600.00!! ie the vat goes up from £35.00 to £105.00.

I have always liked the 3.5% "rate" that I have always belived the revenue was happy with.

I have written to the revenue for specific guidence and they have simply refered me to their standard documentation, the relevant bit of which I enclose.

Is any one else getting confusing feedback from thier clients or the revenue?

Is anyone doing anything different from the 3.5% rate on the entire invoice over 28 days?

David 

This is an interesting one, we have also come across this issue recently. The revenue said we were ok using the 3.5% rate, this has been very useful as it is easy to invoice but additionally it means we do not have to deal with the issue of partial VAT calculations on input tax.

I'd be very interested to understand if anyone else has had recent discussion on this?

Kind regards

Giles

Since posting the first message I have yet another customer saying:

"We have consulted further with our tax director on these invoices and he is clear that we cannot process the invoices as presented. We need to ensure that we are able to directly tie our VAT return figures back to the source documents, and as there is no recognised 3.5% in the VAT return we are presented with a problem.

We have therefore been advised that if you can supply certified copies of the  outstanding invoices, clearly showing an additional breakdown of the VAT figures  between standard rated and zero rated items, we should be able to process through our system"

Does anyone have anything in writting from the revenue saying "You're OK" using the 3.5% rate - I would love to send something from revenue to the client.

Thanks - David

We as a software company writing software for the serviced apartments industry have reviewed the 3.5% approach with the Inland Revenue and they have said that, after 28days you should do 20% of the booking value at full vat (currently 17.5%) and the balancing 80% at 'zero rated VAT'. I.e. it is not exempt.

The point that the tax is not vat exempt is important as you do not need to worry about partial exemption in your purchase tax.

Previously City Apartments Ltd wrote:

Since posting the first message I have yet another customer saying:

"We have consulted further with our tax director on these invoices and he is clear that we cannot process the invoices as presented. We need to ensure that we are able to directly tie our VAT return figures back to the source documents, and as there is no recognised 3.5% in the VAT return we are presented with a problem.

We have therefore been advised that if you can supply certified copies of the  outstanding invoices, clearly showing an additional breakdown of the VAT figures  between standard rated and zero rated items, we should be able to process through our system"

 

Does anyone have anything in writting from the revenue saying "You're OK" using the 3.5% rate - I would love to send something from revenue to the client.

 

Thanks - David

 

 

Hi Giles - did you get anything in writting from the revenue re how they wanted ypur software to perform?

have you changed you invoice layout?

Thanks - David