Is the tax system complicated? Does one rule fit all?
We all know that of course being tax compliant is very complicated and one rule certainly does not fit all.
Even though I’ve been in practice for over 10 years and now I consider myself well versed in most taxes and compliance, however, there is always that one! The one that makes tax so taxing!
What about earning from tips and VAT?
Is this always a straightforward non-vatable? Well I recently engaged with a new client, who had just started working in social media on a US platform. Upon review it was highlighted that they were required to become VAT registered. Preparing for the first return, it became apparent that 85% of income earnt was in tips, so out of scope of vat, non-vatable. Being cautious, I deemed this worthy of confirmation, so I contacted HMRC and it was confirmed that tips were out of scope for vat purposes.
I did feel this to be a bit of a generic confirmation, so I referred to a partner of my company who is a Vat Specialist. They brought to my attention that there was case file with HMRC that again confirmed my previous answers.
The interpretation was a little ambiguous so I again contacted the specialist who agreed this did need further investigation. Finally, it was confirmed that the tips element of the earnt income was in fact liable for VAT, as the agreement with the US company was they were liable as the source company to deal with this element.
Why do we need Vat specialists?
This scenario reiterated the fact to me on how complex the tax system really is. Without the aid of the specialist my client would have been non-compliant for vat.
Most cases are of course relatively straightforward, and HMRC will offer the advice required for compliance, however there is always that time when a specialist input is required.
How can Tandem help with your Vat queries?
When I set up Tandem Business Solutions my aim was to service all requirements for clients regarding their accounts. Thankfully at that time I partnered with a network of various experts in designated fields to ensure compliance (especially tax) is adhered to.
So if you have any queries regarding you own tax please click on BOOK A CALL .
I guarantee you if I can not provide the answer straight away one of my partners will!