FL Memo Ltd © 2007

VAT Memo 2007-2008 Newsletter Issue 1

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Compliance  

 

Electronic invoices

Transmission

See VM ¶2850

When a trader commences electronic invoicing there is no longer any requirement to notify HMRC. However, if he is in any doubt about the suitability of his system (and particularly its compliance with HMRC's published requirements) he should contact them for advice.
In this case, HMRC expect the trader to provide:

- an indication of the standard under which the invoice message has been drafted;

- a formatted "dump" of an example invoice; and

- an overview of the main system concepts, including control over authenticity and integrity of data.

A variety of invoicing message formats are acceptable, including:

- traditional EDI standards such as UN/EDIFACT, ODETTE and TRADACOMS;

- XML-based standards; and

- comma-delimited ASCII, PDF.

Further internal controls that HMRC now expect to see also include:

- the ability to demonstrate that there is a recovery plan in case of a system failure or loss of data; and

- the maintenance of an audit trail between the electronic invoicing system(s) and the internal application system(s) that are used to process the electronic invoices.

Notice 700/63 (revised)

 

Storage

See VM ¶2854

Traders who choose to issue or receive electronic invoices must retain them in a readable form, or be able to produce them in such a form without delay.
HMRC can request access to:

a. the operations of any computer systems which produce or receive VAT invoices or disagreement documents, and to the data stored on them;

b. advice on interrogation facilities which are available on the system; and

c. any supporting documentation including:

- file structures etc;

- audit trail;

- controls;

- safe keeping; and

- information on how the accounting system is organised.

HMRC also have the right to take copies of information from the system, if required (¶3522).

Notice 700/63 (revised)

 

Invoice contents

See VM ¶2860

From 1 October 2007, minor changes have been made to the invoicing rules to reflect EU law.

HMRC will not levy penalties for non-compliance in the first year except in exceptional cases.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Information Sheet 10/07
SI 2007/2085

 

Compound or simple interest

See VM ¶3272

The direct tax case of Sempra Metals Ltd held that a company was entitled to compound interest from HMRC on tax paid early. The decision was based on the view that HMRC had been unjustly enriched by the premature payment of corporation tax, and only compound interest calculations accurately and fairly reflect the commercial reality of how the money could have been used by HMRC.

This decision has particular relevance for VAT, as statutory interest is currently only calculated on a simple basis. There are cases going through the courts at the moment relating to input tax reclaims dating back to pre 2000. Any potential claimant should consider the likely interest position if these cases are decided in favour of the taxpayer.

 

Sempra Metals Ltd v HMRC [2007]

 

 

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