OFFHIRE
As the sage aphorism suggests, death and taxes are the only certainties in life. While the Grim Reaper has been a little busy of late, the pen-pushers have been on the march – and Roy is rather less than happy about it…
COMETH THE CLAWBACK!
Now I’m not trying to make any political statement as to the levels of taxation levied in the UK, or where our hard- earned pennies are allocated. However, only a Hermit living in a cave on an otherwise deserted island with no electricity would not appreciate the state of the UK Government finances as a result of the COVID-19 Pandemic. Naturally, taxes will have to be raised to redress the worst deficit seen in the Country’s coffers since some deranged German loon bade for world domination back in 1939. However, the recent and somewhat sinister focus on the UK rental industry by the Tax Office may set alarm bells ringing at every Hire Company the length and breadth of the nation.
I refer to their interpretation of the VAT rules regarding the sale of fuel pertaining to refills on hired equipment. The vast majority of hire companies charge 5% on this, as it is below a threshold of 2,300 litres (the point at which it changes to 20%). Mom & pop hire shops have been charging it this way, long before I purchased the business 20-years ago. In fact, some eight years ago we too were subjected to a VAT Inspection by an individual who exuded the same amount of joy as provided by a dose of Anthrax! He didn’t highlight any anomalies in our charging at that point, so we have merrily continued on this path blissfully unaware of any issue.
However, the specific word uttered by our external accountants was ‘Disbursements’. This, it seems, is something of a grey area, which attracts the Tax man to delve up to their armpits like James Herriot in a cow’s rear-end in the hope of catching out an otherwise
reputable and honest company. They believe that all sales of refills should have been charged at 20% and not 5% and therefore they are looking to attack the industry with gusto in an attempt to recoup some of the supposedly mischarged VAT. Currently they have their teeth firmly into the backsides of a significantly sized hire company, to the extent that a hunting terrier with its teeth in a Badger’s arse would be envious of the energy and glee displayed by said tax official.
They are allegedly looking to recoup lost tax, plus interest going back as far as six years!
This will be a test case, and if they win there will potentially be far bigger fish to fry in our industry with the prize of large sums of tax for the Chancellor’s coffers to help pay the divorce bill to the EU and for Boris Johnson’s decorators.
Take heed fellow industry chums. More importantly, take advice as a matter of urgency, as you don’t want to compound the issue further. Seek out the council of the CPA who will do their best to defend our honour in the halls of Westminster, but like in the Second World War, get your tin helmets on, because this could get dangerous!
Happy Hiring.
40 Executive Hire News - June/July 2021
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