c2w scheme to start charging VAT

[lejogger]

But you both are only looking at the change from one perspective, that of the employee. From the employers side the scheme is now dead in the water. I sold the idea to the board by volunteering to do the admin, the amdin consisted of printing out some paperwork and telling the payroll dept how much to deduct for how long. Now with VAT input and output needing to be recorded, the no of people involved means that I can't justify the amount of work and time that the company will be paying for.

There shouldn't be that much to change. It would actually have been more work before hand for the employer. Please bear in mind that I administrate our scheme in my own time (it's not part of my job description, I only volunteered to take it on so that our company would have a scheme) and that I am employed in our finance department so would hope to have a good knowledge of the workings.

Simplified E.g. pay full price for the bikes, claim back the VAT, decide how much VAT savings to pass onto the employee, recover the salary, decide on final payment, complete P11d.

Now there is no VAT complication. pay full price for the bikes, recover the salary, decide on final payment, complete P11d.

Please correct me if I'm missing something.

 

[wiggydiggy]

READ IT

I replied in a slightly sarky way as typing in capitals is generally regarded as quite rude not to mention your short and rather condescending responses. I was hoping to playfully nudge you into a better response but as your obviously not in the mood to help this morning, I'm not in the mood to play games with you so I'll leave you to it.

If anyone else is in a better mood and wants to help me, please feel free.

Just to be clear this changes in Jan 2012 yes?

As that's when my next C2W voucher purchase would be I believe its going to adversely affect me, am I wrong?

 

[lejogger]

I replied in a slightly sarky way as typing in capitals is generally regarded as quite rude not to mention your short and rather condescending responses. I was hoping to playfully nudge you into a better response but as your obviously not in the mood to help this morning, I'm not in the mood to play games with you so I'll leave you to it.

If anyone else is in a better mood and wants to help me, please feel free.

Just to be clear this changes in Jan 2012 yes?

As that's when my next C2W voucher purchase would be I believe its going to adversely affect me, am I wrong?

Now now boys. Let me see if I can help

If your company currently reclaims VAT on the cycle equipment they buy then this would no longer be the case from Jan. If they pass the entire 20% VAT saving onto you then yes, you will lose out on a chunk of potential savings. It all depends on how they currently adminuister the scheme.

There are still good savings to be made however depending on your employer, the company they use to administer the scheme (if they use one), your tax rate etc

Hope this helps.

 

[wiggydiggy]

..........advice...........

Cheers!

Just rang the administrators for my scheme and.....they dont know!

I've left a query with them to find out what they do at the moment and what their plans are (reclaim VAT / pass onto me / other etc) but I think your right and it really is going to depend on how each company chooses to do it.

If I'm brutally honest I'll probably still do it, I like the spreading of the payments and even if the saving reduces I can at least still do that.

Think I will start saving though just as a backup.....

 

[Tyke]

Will this change this years C2W started in April

 

[lejogger]

Will this change this years C2W started in April

I'm not entirely sure. I would be surprised if VAT has been deducted that they would enforce that it was repaid next March, either in full or for the 3 months from Jan so I would think you'll be ok.

However when HMRC changed the transfer of ownership payment guidance in August 2011, this stood for all existing schemes still in process as well as new ones after this date. Why they don't make these changes in line with the April tax year I have no idea.

I think seeing as these changes relate to the monthly hire amounts and you will have signed a contract for these it would be pretty unenforcable anyway. I'll have a dig around the HMRC website though.

 

[Tyke]

I'm not entirely sure. I would be surprised if VAT has been deducted that they would enforce that it was repaid next March, either in full or for the 3 months from Jan so I would think you'll be ok.

However when HMRC changed the transfer of ownership payment guidance in August 2011, this stood for all existing schemes still in process as well as new ones after this date. Why they don't make these changes in line with the April tax year I have no idea.

I think seeing as these changes relate to the monthly hire amounts and you will have signed a contract for these it would be pretty unenforcable anyway. I'll have a dig around the HMRC website though.

Thanks for that I will live in hope things stay the same.

 

[Little yellow Brompton]

Let us know. It will be intresting to hear.

Email from the FD this morning


"It's starting to be too much hassle and trouble to be quite honest. It's not the fact that there is a VAT element to it, its just that its so complicated - even HMRC seem bemused by the rules.



I think that in future, we won't be able to offer this facility due to all the baggage that comes with it.



Shame but there you go

"


RIP C2W

 

[400bhp]

I replied in a slightly sarky way as typing in capitals is generally regarded as quite rude not to mention your short and rather condescending responses. I was hoping to playfully nudge you into a better response but as your obviously not in the mood to help this morning, I'm not in the mood to play games with you so I'll leave you to it.

If anyone else is in a better mood and wants to help me, please feel free.

Just to be clear this changes in Jan 2012 yes?

As that's when my next C2W voucher purchase would be I believe its going to adversely affect me, am I wrong?

I know - I don't take prisoners

Just spoken to our flex bens bod to let me know ASAP about what the plans are for next years C2W.

 

[Little yellow Brompton]

There shouldn't be that much to change. It would actually have been more work before hand for the employer. Please bear in mind that I administrate our scheme in my own time (it's not part of my job description, I only volunteered to take it on so that our company would have a scheme) and that I am employed in our finance department so would hope to have a good knowledge of the workings.

Simplified E.g. pay full price for the bikes, claim back the VAT, decide how much VAT savings to pass onto the employee, recover the salary, decide on final payment, complete P11d.

Now there is no VAT complication. pay full price for the bikes, recover the salary, decide on final payment, complete P11d.

Please correct me if I'm missing something.

Pay for bike, recover VAT, recover value from salary, charge VAT to employee ( at whatever rate tha month , or would it be at point of "sale"?) recover VAT from Salary ,show VAT recovered to both employee and HMRC, pass VAT onto HMRC, decide on final payment, complete P11d.

 

[lejogger]

Pay for bike, recover VAT, recover value from salary, charge VAT to employee ( at whatever rate tha month , or would it be at point of "sale"?) recover VAT from Salary ,show VAT recovered to both employee and HMRC, pass VAT onto HMRC, decide on final payment, complete P11d.

I'm not sure it's this complicated.
The employer would pay full price inc. VAT for the bike and charge the employee full price inc. VAT for the Hire Agreement, so there's no need to recover anything extra from the employee, it's just a 20% larger monthly salary sacrifice payment. Employers will still be eligible to recover any directly attributable input tax in relation to this supply under the Business Activity regulations but this would be unchanged. It's just that the VAT savings are not passed on.

 

[Norm]

Can I just say thanks (and "I told you so" ) to lejogger as there is little, if anything, that he has written that I'd disagree with.

 

[lejogger]

Email from the FD this morning


"It's starting to be too much hassle and trouble to be quite honest. It's not the fact that there is a VAT element to it, its just that its so complicated - even HMRC seem bemused by the rules.



I think that in future, we won't be able to offer this facility due to all the baggage that comes with it.



Shame but there you go

"


RIP C2W

This is a shame. I personally don't believe that it needs to be as complicated as your DoF seems to think it is. Obviously it depends on the size of your company and the number of applicants you have, but even with the 2 amendments that HMRC have made in the past 12 months there are still sizable savings to be made and significant benefits to employees and employers alike.

And if there's any guidance I can give to try and iron out any complications I'm happy to offer my advice as someone who's passionate about the scheme and the benefits of getting more people on bikes.

 

[lejogger]

Can I just say thanks (and "I told you so" ) to lejogger as there is little, if anything, that he has written that I'd disagree with.

Thanks Norm. I know we're both on the same side with this - it's so frustrating to see the amount of disillusion around a scheme that doesn't have to be raising this level of confusion, especially to the point where companies are scrapping it altogether.

If administered properly, even with both of the HMRC setbacks from the last 12 months, there are still many benefits to the scheme for all parties.

 

[Norm]

The last scheme that I set up, about 2 years ago now, would have been little affected by either of the recent clarifications and, if it is still running, will still be delivering savings of at least 25%. And I'd still sign up for it on a heartbeat.

I'm looking at introducing one here, but I've only been in the post for 2 weeks, so I'll wait a bit.