CRT v Andy Wingfield Update

[Tony Dunkley]

A 'River Registration' can be priced at no more than 60% of a Canal Licence (by law)

 

Is that 60% based on the net of VAT licence price or the VAT inclusive price ?

 

If it is based on the VAT inclusive price then the cost to the boater will remain the same but C&RT will get a greater income as they will no longer be 're-paying' HMRCE the VAT on the 'registration'.

 

C&RT's published table of fees for the phony 'Rivers only Licence' shows those fees as 60% of the VAT inclusive cost of a genuine boat Licence.

[Alan de Enfield]

 

C&RT's published table of fees for the phony 'Rivers only Licence' shows those fees as 60% of the VAT inclusive cost of a genuine boat Licence.

 

I know, what I was trying to ascertain is 'what is the base line' (described in the Act) for the 60% calculation

 

If a canal & river licence is £800 + VAT, ie a charge to the boater of £960

Should a River Registration be 60% of the £800, or 60% of the £960 ?

[Sabcat]

On this point of how VAT works

 

 

Dave's post is actually right.

 

You have made the Schoolboy error of assuming that "exempt" and "zero rated" are the same thing.

 

They aren't.

 

If you sell zero rated goods and services, you can reclaim the input VAT on your supplies.

 

If you sell goods or services that are VAT exempt, you cannot reclaim input VAT.

 

If you sell a mixture, then the amount of VAT that you can reclaim is pro-rata to the proportion of your sales in each category.

 

So, worked example;

 

I run an organisation that supplies two products;

 

Product A sells for £1000 and I sell 75 each year

Product B sells for £500 and I sell 25 each year.

 

I receive a government grant in addition to my income

 

My expenditure on VAT-able supplies is £75,000 + VAT each year

 

Take two scenarios;

 

1) Both are standard rated;

 

Gross Income from Product A is £75,000

VAT on Sales is £12,500

 

Gross Income from Product B is £12,500

VAT on Sales is £2,083

 

Expenditure is £90,000

Input VAT is £15,000

 

VAT liability is -£417

 

Shortfall of income is £2,083

 

2) A is standard rated, B is exempt;

 

Gross Income from Product A is £75,000

VAT on Sales is £12,500

 

Gross Income from Product B is £12,500

 

83% of sales are subject to VAT

 

Gross Expenditure is £90,000

Input VAT is £15,000

reclaimable input vat is £12,499

 

VAT liability is £1

 

Shortfall of income is £2,501

 

All the customers paid EXACTLY the same for what they bought, but by having all the supplies in-scope for VAT, there is £418 more money.

 

Zero rating is usually good news. Exemption less so.

 

Dave's actually right and I'm wrong. As for the implications or otherwise of this, I don't know.

[NigelMoore]

 

I know, what I was trying to ascertain is 'what is the base line' (described in the Act) for the 60% calculation

 

The original legislation does not specify because the 1971 Act predates the introduction of VAT in 1973, and predates the compulsory pleasure boat licence. The 60% of the pleasure boat licence rate, for certificates, was introduced once the PBC became compulsory under the 1976 byelaw, as provided for in section 4(1) of the 1983 Act.

 

As VAT is a tax added to that which is charged, I would have thought that the 60% should relate to that which goes to CaRT, not the combined figure. Otherwise 20% extra is being paid for something which does not attract the tax.

 

The wording of the relevant section would seem to reinforce that:

 

“the charge payable for the registration of a pleasure boat shall not at any time exceed 60 per centum of the amount which would be payable to the Board for the licensing of such vessel on any inland waterway other than a river waterway . . .”

 

I would have thought that a clear distinction could be made between “the amount . . . payable to the Board” and the amount payable to the Board plus any extra collected on behalf of HMRC.

 

 

[mayalld]

 

The original legislation does not specify because the 1971 Act predates the introduction of VAT in 1973, and predates the compulsory pleasure boat licence. The 60% of the pleasure boat licence rate, for certificates, was introduced once the PBC became compulsory under the 1976 byelaw, as provided for in section 4(1) of the 1983 Act.

 

As VAT is a tax added to that which is charged, I would have thought that the 60% should relate to that which goes to CaRT, not the combined figure. Otherwise 20% extra is being paid for something which does not attract the tax.

 

The wording of the relevant section would seem to reinforce that:

 

“the charge payable for the registration of a pleasure boat shall not at any time exceed 60 per centum of the amount which would be payable to the Board for the licensing of such vessel on any inland waterway other than a river waterway . . .”

 

I would have thought that a clear distinction could be made between “the amount . . . payable to the Board” and the amount payable to the Board plus any extra collected on behalf of HMRC.

 

 

 

The whole amount is payable to the board.

 

The fact that it must remit some of it elsewhere isn't material to that question

[Tony Dunkley]

 

The whole amount is payable to the board.

 

The fact that it must remit some of it elsewhere isn't material to that question

 

By whatever means you may attempt to explain or excuse it, the inescapable truth is that, on all the available evidence, it is apparent that C&RT are dishonestly passing off registration Certificates as Licences to enable them to collect VAT in respect of something on which it is NOT payable.

[RichardN]

So you want to keep a boat on a river waterway, not pay anything and get VAT back. Hopeless

 

VAT was debated extensively years ago. BW issued a briefing note at the time:

 

 

Why charge VAT on craft licences?

 

British Waterways is frequently asked why we charge VAT on our
licences. Organisations, businesses and individuals can charge VAT if
they are making a supply of services. BW is making a supply of
services in allowing boats access on its waterways.

Background

 

Prior to 1989 BW did not charge VAT on its craft licences and as a
result was unable to recover VAT on its general repairs and maintenance
of the canals.

 

In 1989 BW decided to charge VAT on its property, including canals, so
that it could generate taxable activities (including charging VAT on
the craft licence) on the canals, which in turn allows BW to recover
the VAT incurred on general maintenance and refurbishment. This is a
considerable sum of money which is reinvested in the waterways.

 

What happened to the cost of boat licences?

 

BW did not increase the overall cost of the craft licence to the
customer when it decided to charge VAT. If for example if the licence
at the time cost £300, after BW opted to charge VAT the licence still
cost £300 but the cost was split into £255 plus £45 VAT.

 

How does this charge benefit the canal network?

 

If BW didn't charge VAT on the craft licence, at today's level of
expenditure on the canal network, BW would be losing up to £20 million
per annum in VAT on the general and major repairs, and the price of the
craft licence and other services would need to be increased
significantly to offset this loss.

 

Why doesn't the Environment Agency charge VAT on its registrations?

 

The Environment Agency has a special status within the VAT legislation
that allows it to reclaim VAT charged on work carried out on its
waterways. Our request to HM Treasury for BW to have the same status
was rejected.

 

What about river only licences?

 

Even though BW may not own the land forming the bed of the river it is
the 'beneficial owner' because it has the right to receive the benefit
of any supplies made of the land such as rental income. It therefore
has the right to charge VAT on river licences.

 

[Alan de Enfield]

 

The whole amount is payable to the board.

 

The fact that it must remit some of it elsewhere isn't material to that question

 

I'm not sure about that.

 

As a VAT registered business our annual membership fees were due 1st April, we sent out the invoices in February.

I was hauled over the coals because the VAT should be paid to HMRCE in the period in which the invoice is submitted, not on receipt of payment. (I was putting it into the 'accounts' on receipt).

My argument was that I did not know how many would be renewing their membership so did not know how much to pay. I was told that if I overpaid it could be corrected in the next period(s).

 

So - I had to pay HMRCE their money out of my money 2 or even 3 months in advance of receiving it.

.........................

 

What about river only licences?

 

Even though BW may not own the land forming the bed of the river it is

the 'beneficial owner' because it has the right to receive the benefit

of any supplies made of the land such as rental income. It therefore

has the right to charge VAT on river licences.

 

 

But as has been proven a number of times (even by quoting the relevant paragraph from the Act) there is no such thing as a 'Rivers Licence' - it is a figment of BWs and C&RTs imagination.

They can issue a PBC or Registration but not a licence.

[mayalld]

 

By whatever means you may attempt to explain or excuse it, the inescapable truth is that, on all the available evidence, it is apparent that C&RT are dishonestly passing off registration Certificates as Licences to enable them to collect VAT in respect of something on which it is NOT payable.

 

The inescapable truth is that removing VAT wouldn't make them one penny cheaper to the boater, and would reduce the income to CRT

[mayalld]

So are you seriously asking us to believe that CRT is accounting to HMRC for VAT that it has no authority to collect in the first place and for which it does not issue the required VAT invoice?

 

VAT may not be simple - it's yet another European imposition after all - but Section 2 of the Fraud Act is rather easier to understand:

 

Fraud by false representation

 

(1)A person is in breach of this section if he—

 

(a)dishonestly makes a false representation, and

 

(b)intends, by making the representation—

 

(i)to make a gain for himself or another, or

 

(ii)to cause loss to another or to expose another to a risk of loss.

 

(2)A representation is false if—

 

(a)it is untrue or misleading, and

 

(b)the person making it knows that it is, or might be, untrue or misleading.

 

Yes, I believe that they are accounting to HMRC for the VAT that they collect on river registrations. It is to their advantage to do so, because by accounting for that VAT, they validate their claim for 100% of input VAT back.

 

Are you suggesting that they don't issue a VAT invoice for river registrations?

 

VAT law is VAT law, and there is a whole industry exploring where the boundaries lie (cf Jaffa Cakes, and recent rulings on hiring out rooms with and without catering)

 

In some cases, HMRC will take cases to tribunal to get a definitive line drawn. In others, there is no VAT notice, and the individual business decides within the framework of VAT law. There is nothing to say that all businesses will treat similar supplies identically, and until HMRC rule on the issue, they can do that.

 

It probably suits HMG to allow CRT to take an advantageous VAT position, rather than see extra demand for grants.

[NigelMoore]

 

It probably suits HMG to allow CRT to take an advantageous VAT position, rather than see extra demand for grants.

 

No 'probably' about it I would think.

[Mike Todd]

 

I'm not sure about that.

 

As a VAT registered business our annual membership fees were due 1st April, we sent out the invoices in February.

I was hauled over the coals because the VAT should be paid to HMRCE in the period in which the invoice is submitted, not on receipt of payment. (I was putting it into the 'accounts' on receipt).

My argument was that I did not know how many would be renewing their membership so did not know how much to pay. I was told that if I overpaid it could be corrected in the next period(s).

 

So - I had to pay HMRCE their money out of my money 2 or even 3 months in advance of receiving it.

 

But as has been proven a number of times (even by quoting the relevant paragraph from the Act) there is no such thing as a 'Rivers Licence' - it is a figment of BWs and C&RTs imagination.

They can issue a PBC or Registration but not a licence.

Hence, I surmise, some places will send out renewal Notices and only invoice once someone has submitted a request to renew.

[mayalld]

 

But as has been proven a number of times (even by quoting the relevant paragraph from the Act) there is no such thing as a 'Rivers Licence' - it is a figment of BWs and C&RTs imagination.

They can issue a PBC or Registration but not a licence.

 

Is there anything in law that says that you must always refer to something by its strict legal name, even if it is convenient to call it something else, and even if everybody knows it as something else?

 

Do you buy a "Television Licence"

Do you take your car for an "MOT Test"

Did you take a "Driving Test"

Did you protest about the "Poll Tax"

Did you complain about the "Bedroom Tax"

Did you once complete an application form for a "Tax Disc"

 

None of those things were legally called what they were commonly known as.

[Jerra]

 

Is there anything in law that says that you must always refer to something by its strict legal name, even if it is convenient to call it something else, and even if everybody knows it as something else?

 

Do you buy a "Television Licence"

Do you take your car for an "MOT Test"

Did you take a "Driving Test"

Did you protest about the "Poll Tax"

Did you complain about the "Bedroom Tax"

Did you once complete an application form for a "Tax Disc"

 

None of those things were legally called what they were commonly known as.

More or less what I was suggesting when I mentioned synonyms many posts back. You however have expressed yourself more clearly than I did.

[Alan de Enfield]

 

Is there anything in law that says that you must always refer to something by its strict legal name, even if it is convenient to call it something else, and even if everybody knows it as something else?

 

Do you buy a "Television Licence"

Do you take your car for an "MOT Test"

Did you take a "Driving Test"

Did you protest about the "Poll Tax"

Did you complain about the "Bedroom Tax"

Did you once complete an application form for a "Tax Disc"

 

None of those things were legally called what they were commonly known as.

 

Absolutely and no argument - except when by calling something, something else means you can charge an extra 20% for it.

 

A bar / pub is not allowed to sell tap-water, they can however sell bottled water.

If I bottle tap water can I then sell it ?

 

That seems to be as 'muddled thinking' as you are suggesting

[mayalld]

 

Absolutely and no argument - except when by calling something, something else means you can charge an extra 20% for it.

 

A bar / pub is not allowed to sell tap-water, they can however sell bottled water.

If I bottle tap water can I then sell it ?

 

That seems to be as 'muddled thinking' as you are suggesting

 

Well;

 

1. I don't accept the premise that they are using the word "licence" to enable the VAT charge. The question as to whether a registration fee is VATable is complex, and rests on the facts rather than the name given to it.
2. They aren't charging 20% extra. The charge is the charge. If it suddenly became VAT exempt, the charge would be the same. CRT would cease to hand the VAT element to HMRC, and HMRC would reduce the amount of Input VAT that CRT could reclaim.

[Alan de Enfield]

 

 

Well;

 

1. I don't accept the premise that they are using the word "licence" to enable the VAT charge. The question as to whether a registration fee is VATable is complex, and rests on the facts rather than the name given to it.
2. They aren't charging 20% extra. The charge is the charge. If it suddenly became VAT exempt, the charge would be the same. CRT would cease to hand the VAT element to HMRC, and HMRC would reduce the amount of Input VAT that CRT could reclaim.

 

 

The law states that the registration fee can only be 60% of the licence fee, if the licence fee is the sum, net of VAT, then C&RT will need to not only reduce the registration fee but refund the balance backdated to ??????

 

Should the 60% be gross of VAT then I accept that there would be no reduction in cost to the boater, and, C&RT would actually benefit by the difference.

Edited February 23, 2016 by Alan de Enfield

[Tony Dunkley]

 

 

Well;

 

1. I don't accept the premise that they are using the word "licence" to enable the VAT charge. The question as to whether a registration fee is VATable is complex, and rests on the facts rather than the name given to it.
2. They aren't charging 20% extra. The charge is the charge. If it suddenly became VAT exempt, the charge would be the same. CRT would cease to hand the VAT element to HMRC, and HMRC would reduce the amount of Input VAT that CRT could reclaim.

 

 

I'm not sure if you've misunderstood what this is all about, or you're attempting to divert attention from the real issues by way of specious argument.

C&RT are not charging VAT on boat registrations as a money making exercise, and that is not what is being suggested. They are using it as an adjunct to deception in order to, as Gillian has said earlier, reinforce the ‘licence’ status of the registration certificates.

 

Either way you're ignoring the evidence of the C&RT internal E-mail, containing as it does, some clear indications of dishonest intent on at least two fronts.

The first line of the opening paragraph discloses C&RT's intention of conning rowing clubs [for obvious reasons, predominantly located on rivers] into believing that they must 'licence' their boats, and goes on to make it clear that the Rowing Clubs are far from happy about it.

In what has all the appearances of 'sweetener' to placate the Rowing Clubs and forestall any further argument which could lead to the exposure of their misrepresentation of Registration Certificates [PBC's], C&RT then propose a method by which the Rowing Clubs can avoid paying VAT on the phony 'Licences' that are being foisted on them.

In the third paragraph of the internal E-mail, VAT is described as a ''fly in the ointment'', followed up with "this may also provide the VAT loophole that is required".

 

C&RT are not misrepresenting a PBC [River Registration] as a 'Licence' to, as you put it, ''to enable the VAT charge'', they are collecting VAT on PBC's in order to facilitate their misrepresentation of them as Licences.

Edited February 23, 2016 by Tony Dunkley

[Graham Davis]

 

By whatever means you may attempt to explain or excuse it, the inescapable truth is that, on all the available evidence, it is apparent that C&RT are dishonestly passing off registration Certificates as Licences to enable them to collect VAT in respect of something on which it is NOT payable.

 

Only in your (twisted) world!!

It appears that HMRC are quite happy with the situation, otherwise they would have stopped it before now.

 

Still, any excuse for an anti-CaRT rant!!

[Tony Dunkley]

 

Only in your (twisted) world!!

It appears that HMRC are quite happy with the situation, otherwise they would have stopped it before now.

 

Still, any excuse for an anti-CaRT rant!!

 

HMRC will only continue to be 'happy with the situation' until they realize that they are being deceived just as much as the river boaters who are sold these phony 'Licences' by C&RT. They [HMRC] have so far accepted C&RT's description of what they're collecting standard rate VAT on at face value, and because boat Licences do attract VAT at standard rate it will appear to HMRC that nothing is amiss.

 

It's really quite a clever piece of circular and self perpetuating deception on C&RT's part. First they misrepresent a PBC [Registration] as a Licence, then, with the appearance of doing things correctly, they add VAT to the phony 'Licence' fee. All in all, a tidy and quite convincing false trail with PBC's well documented, in HMRC's records in addition their own, as being 'Licences', . . . which of course, they are not.

Edited February 23, 2016 by Tony Dunkley

[GUMPY]

So come on then Tony, do your civic duty and inform HMRC of CRT's wrong doings.

[Tony Dunkley]

So come on then Tony, do your civic duty and inform HMRC of CRT's wrong doings.

 

I wouldn't think there's much need for me to bother, . . . not when you consider the large number of river boaters who have been paying over the odds for their River Registrations [PBC's] and are now entitled to a refund of all the VAT they've ever paid on them.

Edited February 23, 2016 by Tony Dunkley

[gaggle]

 

Only in your (twisted) world!!

It appears that HMRC are quite happy with the situation, otherwise they would have stopped it before now.

 

Still, any excuse for an anti-CaRT rant!!

Can you explain , if a registration certificate is being sold as a licence why you feel it is right and correct

[RichardN]

 

I'm not sure about that.

 

As a VAT registered business our annual membership fees were due 1st April, we sent out the invoices in February.

I was hauled over the coals because the VAT should be paid to HMRCE in the period in which the invoice is submitted, not on receipt of payment. (I was putting it into the 'accounts' on receipt).

My argument was that I did not know how many would be renewing their membership so did not know how much to pay. I was told that if I overpaid it could be corrected in the next period(s).

 

So - I had to pay HMRCE their money out of my money 2 or even 3 months in advance of receiving it.

 

Can you use cash accounting? https://www.gov.uk/vat-cash-accounting-scheme/overview

[RichardN]

But as has been proven a number of times (even by quoting the relevant paragraph from the Act) there is no such thing as a 'Rivers Licence' - it is a figment of BWs and C&RTs imagination.

They can issue a PBC or Registration but not a licence.

 

That was a quote straight from the press release so BW's words not mine.

 

My words now: Irrespective what you call it if CRT is entitled to make a charge then why does anyone think it can be without VAT? Quoting the example of the EA is a complete red herring as they have this special status which BW/CRT do not.

 

The inescapable truth is that removing VAT wouldn't make them one penny cheaper to the boater, and would reduce the income to CRT

 

Someone understands, thank goodness.