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Ensuring All Income is Correctly Identified


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4th July 2013

The recent ECJ judgement in the case C-219/12 Fuchs is another timely reminder to ensure that you are capturing all business income for your clients when considering VAT registration obligations or VATable income when completing VAT returns.

Mr Fuchs had solar panels fitted on the roof of his house. He used some of the electricity generated for personal use and then sold the surplus energy to the electricity network. The Court decided that the sale of surplus energy to the electricity network was an economic activity as it was carried out for the purpose of obtaining income on a regular basis. On this basis Mr Fuchs became a taxable person and was required to account for VAT on the sale of the energy.

If you have clients that are sole traders,or if any of your clients are generating income outside their partnership or limited company status, we recommend that you analyse the income from a VAT perspective to identify whether it is deemed to be an 'economic activity' for VAT purposes. Examples of such income could include:-

Selling items on ebay regularly (more than selling on own wares)
Sale of energy as per Fuchs
Commission from introducing one person to another (even if the commission is not related to the sole traders usual business)
Income from sale of artwork/crafting
Party planning (e.g. Avon, Pampered Chef etc)

Do not hesitate to contact our helpline if you would like to discuss any of your client's income streams in more detail.

About the Author

The VAT People are leading VAT and Customs Duty consultants based in the North West of England. We work with a wide range of businesses throughout the UK as well as assisting our accountancy colleagues to unravel the thorny VAT issues for their clients. We are one of the UK's largest and most comprehensive sources of VAT and Customs advice, our consultancy team having over 140 years of experience in VAT and Customs gained in either HMRC or a Big 4 accountancy practice environment.

Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.

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Article Published/Sorted/Amended on Scopulus 2013-07-31 09:04:07 in Tax Articles

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