Chartered accountant Clement Keys has welcomed the decision by
HM Revenue & Customs (HMRC) to rule that the collection of
trade waste by local authorities is a non-business activity and
free from VAT, as this will help to reduce costs for a wide variety
of organisations.
"This ruling will not affect the majority of VAT registered
businesses, because they will have recovered in full any input VAT
they have paid, but it is very good news for charities, businesses
in the financial, insurance, education, healthcare, sport and
property management sectors and unregistered firms, for whom the
VAT element of their bills represents a real cost," says Director
of VAT Services Steven Simmonds.
Following a lengthy and detailed review, HMRC's Policy Branch
has determined that trade waste collection services provided by
local authorities are non-business supplies so are not, and never
should have been, subject to VAT.
"Local authorities will have already implemented this change for
future supplies, but there is scope for businesses that have been
using these waste collection services to recover the VAT they have
paid," adds Mr Simmonds.
"Under current guidance businesses can typically claim back VAT
payments over at least four years, but previous decisions suggest
claims on council waste collections could go back even further, so
we would urge any organisation affected by this ruling to act
now."
Clement Keys specialise in services to the not-for-profit sector
and are advising charities, partially exempt businesses and
unregistered firms that have been charged VAT on their local
authority waste collection services to write to their council
seeking a credit note and a refund of the VAT overpaid.
This decision by HM Revenue & Customs only impacts on waste
services provided by local authorities, so businesses which go to
commercial providers for their trade waste collection will still
have to pay VAT on these services.