"SavetheUKCC" petition

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Mick Norris
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Re: "SavetheUKCC" petition

Post by Mick Norris » Tue Aug 23, 2016 4:44 pm

Does the IVA mean he will actually be paying the outstanding VAT, or will it be written off in whole or part?
Any postings on here represent my personal views and should not be taken as representative of the Manchester Chess Federation www.manchesterchess.co.uk

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JustinHorton
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Re: "SavetheUKCC" petition

Post by JustinHorton » Tue Aug 23, 2016 5:49 pm

Confusingly, the Spanish for VAT is IVA, so I'm completely lost now
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JustinHorton
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Re: "SavetheUKCC" petition

Post by JustinHorton » Tue Aug 23, 2016 5:57 pm

Neil Graham wrote:The following judgement may be of assistance - it goes back to 2013. http://www.bailii.org/uk/cases/UKFTT/TC ... 03334.html. I make no comment on what the judge has to say in his ruling; I leave it to forum members to draw their own conclusions.

Going on to a further point raised by Justin and others; despite the above ruling it seems clear from the entry form that VAT wasn't levied or mentioned after the ruling.
So I would be right if I were to state that Mike Basman was informed that he should be adding VAT, lost a court case on the matter, was refused permission to appeal against that judgement and was nevertheless some years later still not adding VAT?
"Do you play chess?"
"Yes, but I prefer a game with a better chance of cheating."

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Michael Flatt
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Re: "SavetheUKCC" petition

Post by Michael Flatt » Tue Aug 23, 2016 6:00 pm

JustinHorton wrote:Confusingly, the Spanish for VAT is IVA, so I'm completely lost now
This might help: https://www.citizensadvice.org.uk/debt- ... ankruptcy/

The outlook doesn't look so bleak. If Mike sorts out the VAT to the satisfaction of the HMRC there doesn't seem to be any reason he can't continue to run the UKCC.

Alan Kennedy
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Re: "SavetheUKCC" petition

Post by Alan Kennedy » Tue Aug 23, 2016 8:39 pm

JustinHorton wrote:
So I would be right if I were to state that Mike Basman was informed that he should be adding VAT, lost a court case on the matter, was refused permission to appeal against that judgement and was nevertheless some years later still not adding VAT?[/quote]

the time scale is not given and it is not clear whether it is a failure to register, failure to return vat due or failure to pay. It all amounts to the same thing so you analysis is broadly correct.

Alan Kennedy
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Re: "SavetheUKCC" petition

Post by Alan Kennedy » Tue Aug 23, 2016 8:49 pm

Mick Norris wrote:
Simon Brown wrote:If Mike has settled his VAT liability via a CVA
It's an IVA as shown here running from 8 August 2016 to 8 August 2017
That does not look like an IVA to me. It is a record of his bankruptcy which unless there are other matters (such as an application to extend the bankruptcy) will be discharged one year after the date of the order. That is unfortunately not the end of the matter for Mike he has a duty to cooperate with his Trustee in Bankruptcy ad infinitem. If he is subject to an income payments order or income payments agreement that usually last three years . All of his assets including his publishing income and his house and the database of schools will pass to the trustee in bankruptcy. It is not a pleasant experience as you lose total control. This may be cynical but most bankrupticies produce few realisations for creditors and realisations often to seem to cover the Insolvency practitioners fees. Again these depend on the case but I saw a case 10 years ago when the firm charged 25K just to sell a house and deal with creditors claims. The amount of equity in the house 23.5K!
Simon Brown wrote:Please let's not speculate as to how UKCC can save VAT going forward. VAT is a hugely complex area best left to the specialists - I'm not one but I have more knowledge than most and even I can see that the level of VAT expertise being demonstrated on this thread is very low.
Most general practitioner accountants should be able to deal with Mr Basmans tax issues - does not need to be a specialist at a price of between 300- 800 per annum depending on the quality of the accounting records. The tax law quoted (a tax tribunal case) does not really tell us that much because it was a proceedural issue -ie Mike Basman does not appear to have appealed the customs decision in time and the tribunal case was struck out because it had not reasonable prospect of success - he was late and the grounds for the appeal (paraphrasing his human rights defence - life is tough and unfair) were never going to succeed. Much better would have been that he fought the case before this date on the grounds the supplies were not part of a "business" but given he put the income on his tax return it is difficult to see that would have been successful. As regards whether the invoices and supplies to schools mentioned VAT or not that is irrelevant - the price charged is deemed to be a VAT inclusive price and vat due is 1/6th of the vatable turnover.

Hope that is helpful. Please treat this as general comment and if in the unfortunate position of owing hmrc money please take specific advice.

Alan Kennedy
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Re: "SavetheUKCC" petition

Post by Alan Kennedy » Tue Aug 23, 2016 9:07 pm

Michael Flatt wrote:
JustinHorton wrote:Confusingly, the Spanish for VAT is IVA, so I'm completely lost now
This might help: https://www.citizensadvice.org.uk/debt- ... ankruptcy/

The outlook doesn't look so bleak. If Mike sorts out the VAT to the satisfaction of the HMRC there doesn't seem to be any reason he can't continue to run the UKCC.
Except he has been made bankrupt and generally speaking IVAs are off limited value as creditors (including HMRC) want their pound of flesh. If Mike was able to sort out the vat question with Hmrc he could apply for an annulment but I very much doubt this will be possible without considerable equity in his house. I tried to find out the charge rates of his trustee in bankruptcy. I found one case (Major Bars Limited) where the report to creditors suggests rates charged will be £550 per hour - but it is not known whether he charges the same rates in bankrupticies.

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Christopher Kreuzer
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Re: "SavetheUKCC" petition

Post by Christopher Kreuzer » Tue Aug 23, 2016 9:36 pm

The bankruptcy is a matter of public record, but the public discussion of it here could maybe be a little bit more sensitive?

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Carl Hibbard
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Re: "SavetheUKCC" petition

Post by Carl Hibbard » Tue Aug 23, 2016 9:54 pm

Christopher Kreuzer wrote:The bankruptcy is a matter of public record, but the public discussion of it here could maybe be a little bit more sensitive?
I agree Mike has got himself in a right mess so not sure dragging it out helps.
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John Swain
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Re: "SavetheUKCC" petition

Post by John Swain » Tue Aug 23, 2016 11:49 pm

Mike Basman has put a detailed explanation on the Delancey website which should reduce some of the speculation:

http://delanceyukschoolschesschallenge. ... ration.pdf

I wish him well and hope that a satisfactory resolution may be found. He has done far more good for junior chess in this country over the past twenty years than any other organiser I know.

Alan Walton
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Re: "SavetheUKCC" petition

Post by Alan Walton » Wed Aug 24, 2016 12:01 am

We all hope that chess should have VAT exception, but it doesn't and that is doesn't really doesn't make it an excuse not to pay VAT, personally it looking to me that Mike is trying his best to wriggle out of a corner of his own making and I have no sympathy to him; also over 20 years no profit has been made out of this organisation, I doubt that

Roger de Coverly
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Re: "SavetheUKCC" petition

Post by Roger de Coverly » Wed Aug 24, 2016 12:22 am

Alan Walton wrote:also over 20 years no profit has been made out of this organisation, I doubt that
It's obvious enough that he's earning from the UKCC to compensate for the time invested. Nothing wrong with that, if the UKCC was constituted as a stand alone organisation, it would be reasonable that it paid a fee to whoever did the legwork. Assuming that he's paying Income Tax on his earnings from UKCC, isn't it possible to partially offset the VAT bill by claiming that he's overpaid on Income Tax? A major source of income is entry fees at £ 15 a head. If suddenly they are only worth £ 12 a head, doesn't this affect the profitability of the UKCC?

The problem of VAT being charged on entry fees to chess tournaments when the turnover exceeds the VAT limits has been known for as long as it has been UK government policy to make such event charges. That's why London based organisers retain independence from one another, rather than coming together under one banner.

Whilst over the chess board the sequence 1. e4 g5 can be made to work, a parallel avoidance of conventional wisdom doesn't work in legal and taxation contexts.

Kevin Thurlow
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Re: "SavetheUKCC" petition

Post by Kevin Thurlow » Wed Aug 24, 2016 8:52 am

The rather unfair thing about VAT is that you have to do all the accountancy work, so that HMRC can then collect the money... This has always been the case though, and they are now dreadfully understaffed. Maybe they will start pursuing Starbucks, Google etc., with the same enthusiasm?

Mick Norris
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Re: "SavetheUKCC" petition

Post by Mick Norris » Wed Aug 24, 2016 9:48 am

The problem with the petition is that it is ill timed - they aren't going to give chess a VAT exemption just after HMRC has spent hard cash on legal fees pursuing a chess business for unpaid VAT

Chess and its players need to pay tax when due, income tax, capital gains tax, corporation tax, VAT etc

I haven't seen an analysis of how much VAT is actually due from chess over a year, and therefore how much revenue HMRC is being asked to give up - let alone which taxes should be raised or which services should be closed (maybe a few more libraries like the one that London based chess club played in - was it Carnegie?) to compensate

Bit like the argument on ECF membership fees, full of "we should pay less" and very little thought of the financial consequences

If there was as much effort put into helping junior chess, as there has been in arguing with HMRC, I think the juniors would be better off
Any postings on here represent my personal views and should not be taken as representative of the Manchester Chess Federation www.manchesterchess.co.uk

Roger de Coverly
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Re: "SavetheUKCC" petition

Post by Roger de Coverly » Wed Aug 24, 2016 10:34 am

Mick Norris wrote: I haven't seen an analysis of how much VAT is actually due from chess over a year
VAT is one of those hidden taxes, as the accounting convention has always been to express amounts after VAT. You would therefore need to estimate it. Many chess organisations have turnover well beneath the VAT threshold. You can estimate turnover for leagues or tournaments by looking at entry fee or income or prize fund outgo. Both Hastings and the 4NCL come in well beneath the limit. In fact if you noted that perhaps an average adult tournament had 100 entries for an entry fee of £ 30, you would have to run a lot of events to get anywhere near the threshold (£3,000 per tournament plays £ 85,000 turnover limit). That would seem to put even serial event managers like e2e4, 4NCL and Adam Raoof in the clear.

The ECF's turnover including the British Championships is from memory in the £ 200,000 to £ 300,000 range assuming that collection and payment of overseas junior trips doesn't have a VAT impact. So that's VAT in the £ 40,000 to £ 60,000 range with some offsets on expenditures like arbiters' accommodation at the British. Coincidently that's around the size of the now defunct DCMS grant.

That leaves the UKCC, where HMRC estimated the VAT at £ 30,000 per year. There's also Chess in Communities and Schools where presumably its status as a charity and supplier of educational activities allows some offset.

Chess suppliers would also pay VAT if their turnover was high enough to require registration. Books are VAT exempt or zero rate.

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