Case of Eligibility to Obtain a VAT Invoice - Essay Example

?Running head: Research report and Problem Analysis Report in law Research report and Problem Analysis Report in law PART1: Research report of Julie Roadway’s case CLIENT: Julie Roadway MATTER: obtaining an VAT invoice from Jeffersons DATE: 31st October 2013 ISSUE: This research report is supposed to look into Mrs. Roadway’s eligibility to obtain a VAT invoice from Jeffersons for the purchase of the freehold of an office development by the name Opal House. Mrs. Roadway’s concern about the VAT invoice arises from her previous issues pertaining VAT where she was subjected to a VAT audit. The audit led to a loss of a lot of money for Mrs. Roadway because she did not have any paperwork like a VAT invoice from the supplier to substantiate that she had paid VAT. The legal representatives for the Jeffersons Company maintain that she does not have the right to ask for a VAT invoice but they were willing to give her their VAT number. The reason given to Mrs. Roadway by the legal representatives for not providing a VAT invoice (i.e. no other customer has ever requested for a VAT invoice) is not sufficient enough to deny her the invoice. For Mrs. Roadway’s business proposal to be financially viable, she has to be able to reclaim this VAT from HM Revenue and Customs (HMRC) because the repayment will reduce her borrowings to a manageable level. However, without a valid VAT invoice from Jeffersons, reclaiming the VAT might become problematic. As a corollary this research report will cover the issues of whether a supplier is required to issue an invoice, when it should be issued and what it must contain. CONCLUSION: Value Added Tax (VAT) can be defined as a category of consumer tax charged for any manufactured consumer product. A VAT invoice is usually dispensed to purchasers who give substantial statistics and details to prove that they have an intention to claim back the VAT paid to the government. In order to acquire a VAT invoice there are a set of some very precise pre-details which must appear on the VAT invoice such as the name, address and VAT number of the company or enterprise that provided the merchandises. For continuous and excellent book-keeping, accurate VAT calculations and invoices are required (Ebrill, et al 2001)1 Mrs. Roadway has already made strides to hire a Private Wealth team which has handled her application to HMRC so that she can charge VAT on the leases and reclaim the VAT that she will pay to Jeffersons. As a result, she has the right to request a VAT invoice from Jeffersons solicitors so that she can have the right paperwork to help her with the process of reclaiming the VAT. Mrs. Roadway had to needed a VAT invoice from Jeffersons’ solicitors because she had previously gone through problematic experience which was brought about by lack of a VAT invoice. The fact that Jeffersons’ solicitors has never issued a VAT invoice to any of their consumers, will help Mrs. Roadway and build up her case against Jeffersons’ solicitors. The pre-requisites put in place to guide the process of dispatching an invoice for purchases as denoted in Article 33 of the VAT Directive2 might make the process of acquiring a VAT invoice frustrating but it is considered important for regulation purposes. In Mrs. Roadways case, the guidelines denoted in the VAT Directive will help Mrs. Roadway show that she deserves to be issued with a VAT invoice from Jeffersons’ solicitors because as per the VAT Directive a potential beneficiary of VAT refund should be issued with a VAT invoice. REPORT: Primary Source: Staatssecretaris van Financien v Stadeco BV, 2009: A primary ruling in relation to the explanation of art21 (1) (c) of the 6th Council Directive was offered. The ruling was that a VAT invoice should be issued to a potential beneficiary of VAT refund. This was in line with Article 33 of the VAT Directive. HMRC concisely states that a registered VAT member has an obligation to provide any VAT-registered clients with a VAT invoice intended for several merchandises or amenities they vend the client3. However, a retailer should not feel obligated to provide a VAT invoice except if the customer requests for it. The HMRC regulations further caution the VAT-registered suppliers that they are legally responsible to provide the VAT invoice. Failure to comply with these regulations might lead to hefty fines as well as other legal complications (HMRC, 2006) In Mrs. Roadway’s case, Jeffersons’ solicitors which is not a retail enterprise failed to comply with HMRC’s regulations by refusing to provide Mrs. Roadway with a VAT invoice On the issue of reclaiming VAT, HMRC succinctly stipulates that an individual or enterprise can reclaim VAT, which they also refer to as input tax, paid for the purchase of merchandises or amenities for a business venture4. VAT can be reclaimed on any purchases made for the business irrespective of whether the merchandises or amenities bought are standard, reduced or zero-rated. Although the individual/enterprise is not registered for VAT, he/she can also reclaim VAT on the purchased merchandises or amenities but only if the good or service bought are for commercial purposes. However, legal VAT invoices can only be dispensed by suppliers who are VAT-registered. An individual or enterprise cannot reclaim VAT on any merchandises or amenities bought from a company that is not VAT-registered (HM Revenue & Customs, 2010) Relationships between merchandise-specific exclusions and the ability of an enterprise to reclaim VAT on the merchandises purchased are not forthright if the enterprise is engaged in multi-production5. In this case Mrs. Roadway’s enterprise is not involved in a multi-production venture hence these complications do not accrue to her business. The legal representatives for the Jeffersons Company as a result cannot use this as an excuse for not providing Mrs. Roadway with a VAT invoice. An individual who intends to reclaim VAT must preserve every essential record for instance VAT receipts and invoices to facilitate the process of reclaiming. This is because the VAT regulations might at times differ with the regulations of income tax rules in terms of business expenses6. The instance in which an individual or enterprise does not have the right to reclaim VAT for the purchased merchandises and amenities are when the goods or services are used for non-business activities such as: buying the goods and services for private use, buying cars or other goods that are not exclusively used for development or progression of the business, and if the merchandises and amenities are purchased for charities or for nonprofit establishments (HM Revenue & Customs, 2006). Since the goods bought by Mrs. Roadway do not fall in any of these categories, she can reclaim VAT and she needs a VAT invoice from Jeffersons’ solicitors to do that. The only time when a supplier is obligated not to issue a VAT invoice include: if the supplier and their client use self-billing means, if the supplier is vending merchandises via the VAT margin scheme for used merchandises, if the supplier is vending merchandises via the Tour Operators’ Margin Scheme and if the supplier has used a pro forma invoice (HMRC, 2006). Since none of these circumstances apply to Mrs. Roadway’s case, Jeffersons’ solicitors should comply with the HMRC’s rules and regulations by providing Mrs. Roadway with the VAT invoice which she so rightly deserves. The issuance of VAT invoices follows a very strict time-limit. The issuance of the VAT invoice to a VAT-registered consumer should not take more than thirty days which are counted form the date when the merchandises or amenities were supplied to the customer. If the customer paid for the merchandises or amenities in advance, the 30 days are counted from when the supplier received the payment. The strict time-limits are put in place to enable the consumer to reclaim the VAT on the purchase, depending on their eligibility. The supplier cannot give out invoices at a later date if they do not have approval from HMRC (HMRC, 2006). Since Mrs. Roadway is eligible for a VAT invoice, Jeffersons’ solicitors should provide her with one which must comprise of all the following components which are stipulated by the HMRC7: an invoice number that is distinctive and is subsequent to the number of the preceding invoice. If an invoice which is marked using a serial number gets spoilt or cancelled, it must be kept and documented so that it can be presented to a VAT official during a VAT assessment. The invoice should also contain the supplier’s name/the name of the enterprise, and its address. Similarly, the invoice should also take account of the supplier’s VAT registration number. The date of the invoice is also a very essential component of the invoice. The date should be accompanied by the exact time that the merchandise was dispatched (i.e. the tax point) (HMRC, 2006). The customer’s details such as his/her name or his/her enterprise’s name, as well his/her address. Details of the goods of services dispatched to the customer should also be accounted for in the invoice. The details of the goods or services should be adequate enough to ascertain what was really dispatched. Another important aspect of the VAT invoice is the percentage cash discount offered to the customer during the transaction. The invoice should not leave out overall amount of VAT paid by the customer as well as the VAT paid for each item purchased (HMRC, 2006).The amount of merchandises bought or the magnitude of the amenities offered should be accounted for in the VAT invoice. The amount paid, exclusive of VAT should also be included in the invoice (HMRC, 2006). If the supplier is a retail dealer and sells of merchandises or amenities for ?250 or less inclusive of the VAT, he/she can provide a simplified VAT invoice (HMRC, 2006). Commencement: VAT Directive which contain essential details about VAT invoice started being implemented on 28th November 2006. Research Sources: the primary source cited on this report i.e. Staatssecretaris van Financien v Stadeco BV, 2009 was obtained from Lexis®Library . Further commentary is contained in Westlaw and Halsbury’s Laws under the topic “VAT Directive 2006”. Updating: The legislation concerning VAT Directive 2006 on Lexis®Library is up to date I also went through Westlaw and Halsbury’s Laws Legislation Analysis for cases on VAT directive 2006 particularly on VAT invoicing but none of the cases were relevant to this report. TIME TAKEN 2 hours 27 minutes References Aizenman, J. and Y. Jinjarak (2008), The Collection Efficiency of the Value Added Tax: Theory and International Evidence, Journal of International Trade and Economic Development, 17, 391-410. Ebrill, L., M., Keen, M., Bodin, J.-P., Summers, V., (2001), The modern VAT, International Monetary Fund, Washington, D.C. Giesecke, J.A. and Tran Hoang Nhi (2010), Modelling value-added tax in the presence of multi-production and differentiated exemptions, Journal of Asian Economics, 21, 156-173. HMRC (2006), VAT invoices: what they must show available at: http://www.hmrc.gov.uk/vat/managing/charging/vat-invoices.htm accessed on 31st October 2013 HMRC (2006), What you can and can't reclaim VAT on available at http://www.hmrc.gov.uk/vat/managing/reclaiming/reclaim.htm accessed on 31st October 2013 HM Revenue & Customs (2010), Measuring Tax Gaps 2009. London. Available at http://www.hmrc.gov.uk/stats/measuring-tax-gaps.pdf accessed on 31st October 2013 TAXUD (2007), AO-009 € A study on the Invoicing Directive (2001/115/EC) now incorporated into the VAT Directive (2006/112/EC) prepared by PricewaterhouseCoopers € Final Report. € 3 November 2008 PART 2: Problem Analysis Report CLIENT: Sam Lawson MATTER: getting rid of a hedgerow to build a gate DATE: 1st November 2013 PROBLEM ANALYSIS The client wishes to know: Whether there are any legal issues restricting the partial cutting of a hedgerow Whether the partial cutting of the hedgerow would lead to a financial penalty Whether the partial cutting of the hedgerow would make Mrs. Cotton criminally liable ISSUES I have, therefore, researched and reported on the following legal issues: Whether the partial cutting of the hedgerow endangers any wildlife animals Whether the partial cutting of the hedgerow would make Mrs. Cotton criminally liable Report 1 Client: Sam Lawson Issue: Whether the partial cutting of the hedgerow endangers any wildlife animals or plant species Conclusion: while local council’s tree office does not have any Tree Prevention order in this area and no intention to impose one, Sam Lawson may have overlooked the issue about the presence of wildlife animals in the hedgerow. Report Primary source: Conwy County Borough Council v Lloyd, 2003 It was established that cutting 100m of hedgerow can be viewed as management of the hedgerow according to reg6 (1) (j) of the Hedgerows Regulations 1997. However, the proper procedure of cutting should be followed prior to cutting or removing any hedgerow. The research on hedgerows and permissions for cutting them led to a very interesting realization. According to the Department of Environment DoE, (1995) hedgerows are an essential wildlife habitat. Around 20 species of animals (mammals) 600 species of plants, 65 species of birds and 1500 species of insects are affiliated with hedgerows and other vegetative fences in the UK0. Modifications and alterations in rural area management in the contemporary day and age have increased and this has led to a decline in hedgerows plantations. This decrease can be attributed to both field expansions, and dereliction of the hedgerow plantations (Bickmore, 2002)0 The Hedgerows Guidelines were established in Environment Act of 1995 in section 97 and were implemented in England and Wales in 1997 0.They are responsible for protecting the species that live in the hedgerows by barring the cutting of most hedgerows in rural areas without first informing the local environmental planning authorities (LPA). If a hedgerow in the rural areas is deemed to be of environmental significance in relation to the conditions stated in the Hedgerows Guidelines, the LPA can forbid its modification by giving a preservation notice of 42 days after receiving the notification. The LPA might also order the replacement of the hedgerow to be removed. The applicants who do not succeed in seeking permission to cut or remove a hedgerow can appeal to the Secretary of State in 28 days after receiving of the LPA’s verdict (Hedgelink, 2008)0. DoE, (1995) stipulated that ancient/historic hedgerows are those that have existed since before the era of the Parliamentary Enclosure Acts (before the mid-18th century). The ancient/historic hedgerows are in most cases, but all cases, habitats to rich, animal, plant, bird, and insect species. Ancient/historic hedgerows usually have woody species like hazel and field maple (Hinsley and Bellamy, 2000)0. In the UK, hedgerows which acts as habitats to rich animal, plant, bird, and insect species usually have an average of more than 3 native woody species in every 30 meters long hedge. Such hedgerows are usually rich in flora species such as bluebell (Bickmore, 2002). Cutting or removing such hedgerows amounts to infringement of the law because they play a role in the definition of species-richness. A study conducted by Selman et al. (1999) puts forward that most regions in the UK like the Sheffield Area have around 83 kilometers of hedgerows0. Nonetheless, reliable statistics on the total amount of the hedgerow vegetation in every region in the UK, the percentage of hedgerows that are historic or species-rich, as well as the magnitude of vandalism and destruction, of hedgerows has not yet been presented. A number of plant animal and bird species that are found in hedgerows are protected by a number of Acts and Regulations which include the Protection of Badgers Act of 1992, and the Wildlife and Countryside Act which was revised in1981(Hedgelink, 2008). Some of the problems arising in Sam Lawson case with regard to the above discussion about hedgerows are as follows: The physical cutting of the hedgerow fences in order to create a gate to move horses in the two paddocks can become safer, quicker and easier. The Mechanized hedge cutting which will be employed in the creation of the gate to connect the two paddocks will inhibit the development of undeveloped hedgerow bushes and shrubs and this can be detrimental to affiliated species. If Sam cuts or removes part of Mrs Cotton’s hedgerow on the period between first March and 31st July, he will be interfering with gestation period of numerous birds because this is usually the main breeding season for most species of birds including the ones that have their habitats in hedgerows (Hedgelink, 2008) Sam Lawson needs to take the hedgerow regulations seriously because infringement of the Regulations is a felonious transgression, carrying a punishment of fine of up to ?5,000 in the Magistrates’ Court (HMRC, 2006). If Sam Lawson is charged with the same offence and prosecuted in the Crown Court, the fine will be unlimited Commencement: The Hedgerows Regulations 1997 were established in Environment Act of 1995 in section 97 and were implemented in England and Wales in 1997 from 1st June 1997 Research Sources: the primary source cited on this report i.e. Conwy County Borough Council v Lloyd, 2003 was obtained from Lexis®Library . Further commentary concerning hedgerow preservation can be found in Westlaw and Halsbury’s Laws. Updating: The legislation Hedgerows Regulations 1997on Lexis®Library is up to date. I also went through Westlaw and Halsbury’s Laws Legislation Analysis for cases on Hedgerows Regulations 1997, the cases available were mostly about tree preservation order and these were not relevant to this report. Report 2 Client: Jenni Cotton Issue: Whether the partial cutting of the hedgerow would make Mrs. Cotton criminally liable Primary source: I searched on Lexis®Library and Westlaw for cases related to Mrs. Cotton and her situation in this report and found no relevant case.­ Conclusion: Though the official client is Sam Lawson, this problem analysis report will be insufficient if it does not cover Mrs. Cotton who is a very significant player in the issue at hand. This is because the property (land) on which the hedgerow is planted is hers and the landowner in a farm where a hedgerow is planted is usually an important element in terms of the legal issues regarding the hedgerow. Report Drawing reference from the Hedgerows Regulations 1997, any person who owns a piece of land which has hedgerow growing on it and wishes to cut or remove the hedgerow is required to inform the pertinent local authority in his or her region(DETR 1997)0. This rule was established to preserve the historically and biologically significant hedgerows from the household activities of land owners. Housing or farm modification can lead to the loss of hedgerows or a deterioration of their maintenance value. This is because modification of the house or the farm by the land owner usually leads to neglect or elimination of the field regions containing the hedgerows0. Modifications in pastoral or agricultural processes by the land owner usually involve the removal of pert of the entire land hedgerow fences with the intention of improving animal breeding, animal movement or harvesting efficacy0. If the land owner leaves his/her hedgerow fence un-managed it turns into rows of over-mature bushes and shrubs with big gaps all along the fence. This decreases the hedgerow’s value as a wildlife habitat and its efficiency in managing stock. Reduction of shrubs in hedgerow fences can also occur because of the Dutch elm disease (Bickmore, 2002). Commencement: The Hedgerows Regulations 1997 were established in Environment Act of 1995 in section 97 and were implemented in England and Wales in 1997 from 1st June 1997 Research Sources: I searched on Lexis Library and Halsbury’s Laws for cases on the sections of hedgerow removal criminal liability as per this report and found no others relevant cases related to Mrs. Cotton’s situation. Updating: N/A Review of research Both Sam Lawson and Jenni cotton will get into serious legal problems if they decide to forego the partial cutting of the hedgerow and this will lead to serious financial penalties which will arise from the hefty fines that will follow. The legal problems will not arise from the infringement of a tree preservation order as Sam Lawson thought but from the destruction of a species rich animal plant and bird habitat. However, this does not mean that the construction of the gate in Mrs. Cotton’s stable will be impossible. It might take more time than Lawson had planned but if they follow the right process to request for permission to cut just a small part of the hedgerow to construct a gate to connect the two paddocks, the bid is likely to go through and the gate will eventually be constructed Advice We need to advice Sam Lawson and Jenni Cotton to file an application to the local environmental authority and present their case. While presenting their case they should emphasize that only a small part of the hedgerow will be cut and thus the effects on the bird animal and insect species living in the hedgerow will be negligible. They should also state their intention to preserve mature hedgerow trees and thickets to the best of their ability, and substitute any trees and thickets which will be lost in the process. In their application proposal they should not forget to mention that they intend to heed to the regulation which forbids them to remove or cut any hedgerow on the period between first March and 31st July because they are aware that they will be interfering with gestation period of numerous birds because this is usually the main breeding season for most species according to Hedgelink, (2008). They should only perform hedgerow cutting in line with the transcribed authorization approved to them by the local environmental authority, or in line with their application in case the local environmental authority does not respond after 42 days of submitting the application (Hedgelink, 2008). TIME TAKEN 3 hours and 57 minutes References Bennett (1999), Linkages in the Landscape: The Role of Corridors and Connectivity in Wildlife Conservation, IUCN, Cambridge. Bickmore, C. J. (2002). Hedgerow Survey Handbook a standard procedure for local surveys in the UK. Countryside Council for Wales. Countryside Agency (2001), The State of the Countryside 2001, Yorkshire and The Humber. Countryside Agency Publications, Wetherby DETR (1998), UK Biodiversity Group Tranche 2 Action Plans. English Nature, Peterborough. DoE (1995), Biodiversity: The UK Steering Group Report. Volumes 1 & 2. HMSO, London. Hedgelink, (2008), UK hedgerow legislation available at http://www.hedgelink.org.uk/UK-hedgerow-legislation.htm accessed on 1st November 2013 Hinsley, S. A. and Bellamy, P. E. (2000), The influence of hedge structure, management and landscape context on the value of hedgerows to birds: a review. Journal of Environmental Management 60, 33–49. Selman R, Dodd F & Bayes K (1999), A Biodiversity Audit of Yorkshire and the Humber. Yorkshire & Humber Biodiversity Forum, Sheffield. The Hedgerows Regulations (1997) available at (http://www.opsi.gov.uk/si/si1997/19971160.htm) accessed on 1st November 2013 Read More