The View from No 50





September 2017


K P Bonney & Co

Chartered Accountants and

Chartered Tax Advisers

50 Cleasby Road  Menston

Ilkley  LS29 6JA

Tel:  01943 870933

Fax:  01943 870925






Mel Stride, the new Financial Secretary to the Treasury issued a written statement on 13 July in which he stated that


·           Businesses with income of up to £85,000 will not have to keep digital records.


·           Businesses with income exceeding £85,000 will have to keep their records in some sort of digital format with effect from April 2019.  But they will only be required to do so for VAT purposes.


·           Businesses with income exceeding £85,000 will be expected to keep records digitally for other tax purposes and to update HMRC quarterly but the earliest start date for this is April 2020.


This is good news.  It relieves many small businesses of the need to concern themselves with changes to how they keep their records.  It also gives HMRC and volunteer businesses time to run a pilot and to learn what works and what doesn’t before making MTD compulsory for those in the over £85,000 bracket.


It is pleasing that government appears to have listened to the many people who responded to the consultation on MTD.  The main concerns of the respondents were that MTD was being rushed unnecessarily and that the costs would outweigh the benefits for smaller businesses.  Further, it is not the job of government to prescribe how businesses keep their records.  When businesses see there is a business case for moving to digital record keeping they will do so.


Thank you to all my clients who responded to the consultation.




National Car Parks charges its customers £1.40 for one hour of parking and £2.10 for three hours.


We have all done it.  We turn up at the ticket machine and we don’t have the right coins.  The


machine doesn’t give change so we end up paying £2.00 for one hour or maybe even £3.00 for three.


At the tax tribunal NCP tried to argue that it shouldn’t have to account for VAT on the overpayments    It claimed the overpayments were not consideration for any supply but ex gratia payments, outside the scope of VAT.


Could you, an exasperated customer in this unfortunate position, regard your overpayment as an ex gratia payment?  Of course not, and neither could the judge.  He ruled that the consideration for VAT purposes is the value given by the customer in return for the service supplied by the supplier.


Accordingly NCP had to account for VAT on the full amount received.


This is an HMRC win which we, as taxpayers and motorists, can all cheer.




A client sends me copies of his sales invoices.  He is VAT registered.  One of his sales invoices shows a fee of £1,000 net plus VAT of £200 and a recharge of £100 for travelling expenses.  Total £1,300.


I groan.


In case you haven’t realised, the problem here is that my client has treated the travelling expenses as a disbursement rather than a recharged expense.  Accordingly he has got the VAT treatment wrong.


You can only treat as a disbursement those expenses which you pay for and which belong to your customer.  For example, when a solicitor deals with a house purchase on behalf of a client, he will often pay for expenses that belong to the client like local authority search fees and stamp duty land tax.  These expenses will eventually be paid for by the buyer so they are clearly the buyer’s expenses and not the solicitor’s.   As long as the solicitor adopts certain procedures these disbursements are not subject to VAT.  Suppose as part of the same property purchase engagement the solicitor has to attend a meeting which involves making a journey at a cost of £200.  This is not an expense which belongs to the buyer.  It is part and parcel of the standard rated legal services supplied by the solicitor.  When recharged this expense must be charged at the standard rate.  And even if the expense in question is a zero rated rail or air fare the recharge must still be made at the standard rate.


The ‘certain procedures’ mentioned above are:


1       the solicitor acted as agent on behalf of his client (the real buyer) when he paid the local authority, HMRC, Land Registry etc.;


2       the buyer received or used the goods or services provided by the third parties and was responsible for paying them and authorised the payments to be made; and


3       the payments are itemised on the solicitor’s invoice in the amounts paid to the third parties.


Coming back to my client and the £100 he recharged for travelling expenses, what can he do?


He can go cap in hand to his customer and ask if he can re-issue his invoice showing an extra £20 for VAT on the recharged travelling expenses.  Alternatively he can take it on the chin and pay over £16.66 out of the £100 to HMRC as VAT.


Uncomfortable either way.  Best to get it right in the first place.




We all like to have a moan about tax.  We all have views on what changes we would like ‘them’ to make.


Well actually ‘they’ are inviting us to have our say on this very subject ahead of the budget later this year.


So here is your chance to do just that.


Of course whether ‘they’ will listen is another matter entirely.


Over to you.




Mark your diary for 9 / 10 September.  The Friends of High Royds Memorial Garden, Menston are holding one of their occasional open weekends.  The garden and chapel will be open between 11am and 1pm and also 2pm and 4pm each day.   The manager of the Hare and Hounds has kindly agreed to allow visitors to use the parking and toilet facilities of the public house on the weekend.


The Friends produce an excellent newsletter.  If you would like a copy please contact Quentin Mackenzie on 01943 876625 or at




Judge Jeffries was interviewing Amy regarding her pending divorce.  'What exactly are the grounds for your divorce?’ he asked.


'Approximately four acres and a nice little home in the middle of the property with a stream running by,' she replied.


'No,' the judge continued, 'I mean what is the foundation of this case?'

'It is made of concrete, brick and mortar,' responded Amy promptly.


'I mean,' he sighed, 'what are your relations like?'

'Ah well, I have an aunt and uncle living here in town and so do my husband's parents.'


'Do you have a real grudge?'


'No, we haven't,' Amy replied, 'We have a two-car carport instead.'


'Please,' the judge took a deep breath and tried again, 'is there any infidelity in your marriage?'


'Yes, both my son and daughter have stereo sets. We don't necessarily like the music, but the answer to your questions is yes,' smiled Amy.


'Ma'am,' the judge raised his voice, 'does your husband ever beat you up?'


'Oh yes,' Amy responded, 'about twice a week he gets up earlier than I do.'


Finally, in frustration, the judge asked, 'Lady, why do you want a divorce?'


Oh, I don't want a divorce,' Amy replied. 'I've never wanted a divorce.  My husband does.  He says he can't communicate with me.'



Copyright:  K P Bonney & Co LLP 2017.  All rights reserved.  No part of this publication may be produced, stored in a retrieval system, or transmitted in any form or by any means, electronic mechanical, photocopying, recording or otherwise without prior written permission of the publishers.  Disclaimer:  The publishers have taken all due care in the preparation of this publication.  No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or the publisher.

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