"SavetheUKCC" petition

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Roger de Coverly
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Re: "SavetheUKCC" petition

Post by Roger de Coverly » Sun Aug 21, 2016 7:32 pm

Most UK chess events have a small enough turnover to be below the VAT threshold. It's a tax advantage that much of British chess is run by small independent fiefdoms rather than the ECF. Evidently HMRC have challenged the aggregate turnover of the Chess Challenge as being subject to VAT.

Stewart Reuben could have told him to be careful with event structuring many years ago if turnover hits VAT limits.

Simon Brown
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Re: "SavetheUKCC" petition

Post by Simon Brown » Sun Aug 21, 2016 7:35 pm

Does UKCC owe £300k in VAT so they now start a petition to change the rules? Or am I missing something? Surely it's obvious that their revenue will exceed the threshold.

Roger de Coverly
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Re: "SavetheUKCC" petition

Post by Roger de Coverly » Sun Aug 21, 2016 7:49 pm

Simon Brown wrote:Does UKCC owe £300k in VAT so they now start a petition to change the rules? Or am I missing something? Surely it's obvious that their revenue will exceed the threshold.
It may be the case that UKCC like the ECF should be registered for VAT. If then entry fees are increased to include VAT, UKCC has to pay VAT, but can the schools then claim it back?

Quite a bit of the UKCC is run locally by junior organisations and similar, so if the local tournaments could be demonstrated to be totally independently of the national UKCC, they don't contribute to UKCC's turnover.

It's a long shot risk for the ECF as well, that it doesn't do anything which might call into question the independence of local bodies from the ECF and thus trigger a need for consolidated reporting across all chess.

Angus French
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Re: "SavetheUKCC" petition

Post by Angus French » Sun Aug 21, 2016 8:28 pm

What happens if an organisation can't meet its VAT liability? Would HMRC go after the individuals who owned/ran the organisation? Is it possible the debt could be written off (or does that only happen with mega-corporations like Google)? Has UKCC received professional advice?

Alan Kennedy
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Re: "SavetheUKCC" petition

Post by Alan Kennedy » Sun Aug 21, 2016 8:51 pm

Angus French wrote:What happens if an organisation can't meet its VAT liability? Would HMRC go after the individuals who owned/ran the organisation? Is it possible the debt could be written off (or does that only happen with mega-corporations like Google)? Has UKCC received professional advice?
it depends who the person making the supply is. Given VAT is charged on VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him the VAT the person making the suppy, other things being equal, would acquire the liability. What I could not see from the UKCC website and or the entry form was what the legal entity making the supply was. In the absence of any other information, and assuming he is running a business, I therefore presume it to be Mike Basman and that in which he would be personally liable for any taxes that are unpaid. In respect of the need for professional advice, one hopes that any accountant preparing a tax return would spot the need for VAT registration.

Ian Thompson
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Re: "SavetheUKCC" petition

Post by Ian Thompson » Sun Aug 21, 2016 9:13 pm

The situation isn't clear to me.

The petition says that the UKCC has been presented with a VAT bill of £300K by HMRC. It then says HMRC wouldn't get much revenue out of it because schools could claim back the VAT they paid to UKCC. That may be true in the future if UKCC started charging schools VAT. Presumably, it isn't true of any sum now due from UKCC to HMRC. If UKCC didn't add VAT onto the amounts schools paid they won't be able to go back now and ask for it.

Simon Brown
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Re: "SavetheUKCC" petition

Post by Simon Brown » Sun Aug 21, 2016 9:37 pm

The argument that "we won't charge VAT because our customers can claim it back" is pure nonsense.

These services are clearly a taxable supply. I think it's difficult to argue that the ECF's services are.

Ian Kingston
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Re: "SavetheUKCC" petition

Post by Ian Kingston » Mon Aug 22, 2016 8:23 am

Phil Ehr made a comment on Facebook about this petition. One sentence stands out:
UKCC's litigation history with HMRC indicates a recurring tax issue.
Does anyone know the background to this?

Richard Bates
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Re: "SavetheUKCC" petition

Post by Richard Bates » Mon Aug 22, 2016 8:39 am

I'm probably missing something here, but if, as implied, the UKCC makes supplies almost overwhelmingly to organisations that can reclaim the VAT on those supplies, why would they not have been charging it? Purely to avoid the administrative hassle? And consequently why would it become a justification for exempting "chess" from being a VATable supply in future, given that to so do would generate no meaningful financial benefit?

E Michael White
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Re: "SavetheUKCC" petition

Post by E Michael White » Mon Aug 22, 2016 8:42 am

I guess large junior events should be run by a charity to avoid VAT and gain other benefits.

Mick Norris
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Re: "SavetheUKCC" petition

Post by Mick Norris » Mon Aug 22, 2016 9:11 am

Richard Bates wrote:I'm probably missing something here, but if, as implied, the UKCC makes supplies almost overwhelmingly to organisations that can reclaim the VAT on those supplies, why would they not have been charging it? Purely to avoid the administrative hassle? And consequently why would it become a justification for exempting "chess" from being a VATable supply in future, given that to so do would generate no meaningful financial benefit?
Because being VAT registered is a pain

When we set up our business in 1999, we became VAT registered so we could reclaim VAT on things we bought, but had to charge clients VAT, which they accepted as part of life - a few years later, when our VATable turnover wasn't as big as we thought it would be, we de-registered, since when life is a lot simpler, but there is no VAT reclaim on purchases

VAT is a fact of life, and any organisation has to make sure it meets all tax regulations (I'd imagine auto-enrollment will catch a few out)
Any postings on here represent my personal views and should not be taken as representative of the Manchester Chess Federation www.manchesterchess.co.uk

Ray Sayers

Re: "SavetheUKCC" petition

Post by Ray Sayers » Mon Aug 22, 2016 9:14 am

If you are running a business which earns more than £83k taxable turnover per year, you must register for VAT.

The UKCC has been running since 1996, so I am puzzled that it has not been paying VAT, unless it is a registered charity and had a letter of dispensation from HMRC. In which case HMRC would not be asking for the VAT.

If you are registered for VAT, you need to add it to an invoice, even if the various parties can reclaim the VAT - you can't just not process it.

What is missing here are many details on who is registered for VAT, who financially benefits and who is being asked to pay the VAT (who is liable?).

Edit: I overlapped with Mick's post above.

Roger de Coverly
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Re: "SavetheUKCC" petition

Post by Roger de Coverly » Mon Aug 22, 2016 9:24 am

Ray Sayers wrote:
What is missing here are many details on who is registered for VAT, who financially benefits and who is being asked to pay the VAT (who is liable?).
The issue appears to be at least two and a half years old.

http://swarb.co.uk/basman-ta-uk-chess-c ... -feb-2014/

The link implies that UK Chess Challenge is an individual "trading as", which puts it under the "self employed" or "sole trader" banner.

I also found this which implies that he is VAT registered
http://vat-search.co.uk/RNjS_Michael+Basman

Michael Flatt
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Re: "SavetheUKCC" petition

Post by Michael Flatt » Mon Aug 22, 2016 10:40 am

The UKCC might consider reducing its reported turnover and VAT liability by changing the manner it runs the Megafinal stage.

Currently, all entrants to a Megafinal pay their entry fee directly to UKCC and the local Megafinal organiser receives payment from UKCC based on the number of entrants.

One possibility would be for the local organisers to collect entry fees directly and to pay a levy to UKCC based on the number of entrants, which is how London Junior Chess Championships operate.

Thus, the amount UKCC pays back to local organisers would effectively be removed from its turnover and the VAT liability reduced accordingly.

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