HMRC has issued Revenue & Customs Brief 11/2020 on the VAT and SDLT implications of lease variations. This is timely in view of the renegotiations on lease terms between landlord and tenant that may be going on as a result...
The case of Paul Newey trading as Ocean Finance This case has previously been heard at the CJEU and Court of Appeal (see Mazars tax blog here), but was referred back to the FTT. Despite acknowledging that Mr Newey entered...
The standard rate of VAT will be temporarily cut for a six-month period from 20% to 5% on selected goods and services, taking effect from Wednesday 15 July 2020 until 12 January 2021. It is anticipated that this will provide...
HMRC have set out the procedure for taxpayers to reclaim VAT they have paid in error (e.g. Direct Debits not cancelled) when they meant to defer the payment with a VAT return under the COVID-19 VAT deferral easement. HMRC have...
The CJEU recently delivered its judgment in the case of World Comm Trading (C-684/18 – a French version of the judgement can be found here), illiustrating risks that can arise in VAT accounting for volume discounts with cross border arrangements....
HMRC has announced a temporary VAT zero rating for PPE (see here and Revenue & Customs Brief 4/2020). Care will need to be taken in relation to issuing and processing invoices concerning relevant PPE in the UK (there should be...
Due to the Covid-19 lock-down the Government has decided to bring forward the commencement date for zero rating e-publications from 1 December to 1 May 2020. See here and Revenue and Customs Brief 3/2020. With effect from 1 May 2020,...
This article highlights the VAT implications of online sales of goods and in particular, during these unprecedented times, the increase in sales via marketplace platforms. Listed below are the main items to consider if your business is selling either directly...
HMRC has announced a relief which allows for certain goods, including medical equipment, crucial to the fight against coronavirus, to be imported free of VAT and customs duties. In addition, in the case of Pfizer (Case C-182/19) the CJEU has...
In this first of a series of VAT updates, we highlight the VAT implications of business donations in response to Covid-19, an upcoming VAT change affecting the construction sector, together with the summary of a recent VAT case regarding single...
As the country grinds to an advised halt, with offices, shops, restaurants and businesses either closing or moving to remote working where possible, you may already be thinking about how the slowing down of the economy will impact on your...
Just before Christmas HMRC issued two notes updating their guidance concerning cross border chain transactions and call off stock arrangements. These two of the four areas of change in the EU 'quick fixes' are covered in more detail below. The...
The Upper Tribunal (UT) case of Target Ltd has confirmed the earlier First tier Tribunal (FTT) decision that loan account services provided by Target Ltd as an outsourcer to Shawbrook Bank were not exempt financial services, but debt collection. This...
It’s nearly 20 years since the Freedom of Information Act 2000 (FOIA) was created. The Act was designed to create a public right of access to previously-inaccessible information held by public authorities but over the years concerns have been raised...
Revenue & Customs Brief 6/2019 explains the implications of SI 2019/1048, which applies from 1 September 2019. The main change is that it will no longer be possible to reduce the output VAT charge without refunding the customer. This is...
The Upper Tier Tribunal (UTT) has ruled that Pertemps Ltd (Pertemps) did not make a supply for VAT purposes by operating a salary sacrifice arrangement relating to travel and subsistence expenses for temporary staff through its business. Background Pertemps operated...
The Upper Tribunal has held that Marks & Spencer’s ‘meal deal’ offer (three food items for £10 plus a free bottle of wine or non-alcoholic equivalent) was a packaged offer the consideration for which needed to be apportioned across all...
On 12 June the EU issued a press release indicating its no-deal Brexit preparations were fit for purpose and that a ‘no-deal' scenario on 1 November 2019 very much remains a possible, although undesirable, outcome. In addition the UK Government...
As a result of a number of CJEU decisions on the VAT treatment of investment management fees to different types of funds, HMRC issued Brief 3/2017 indicating that from 1 April 2019 VAT exemption would no longer apply automatically to...
The VAT reverse charge mechanism is being introduced for renewable energy certificates applies in the UK from 14 June 2019. There is also a Revenue & Customs Brief 4/2019 on this matter. For further information please get in touch with...
The Court of Appeal determined in a case involving GMAC that the UK bad debt relief rules were unduly restrictive between 1978 and 1997, requiring the defaulter to be insolvent, or (from April 1989) that title to goods had been...
In the case of Butt the Court of Appeal confirmed that the imposition of a penalty on a director of a company where that company had been involved in MTIC (missing trader intra-community) fraud was justified. In view of the...
In the complex VAT area of determining whether a food item is confectionary (standard rated for VAT) or a cake (zero rated for VAT), the First tier Tribunal has held that HMRC’s guidance is not fit for purpose. For further...
The CJEU decision in Morgan Stanley has clarified how EU branches should be recovering input VAT on costs incurred in providing services to their overseas European head offices. Unfortunately it is likely to make the VAT compliance process in each...
A recent CJEU case from Romanian concerning the transfer of a restaurant premises where the transferee continued the restaurant business, may have relevance for the way TOGC’s (transfers of a going concern) are treated for VAT in the UK where...
The Upper Tribunal (UT) has rejected an appeal by HMRC against the vacation of a penalty (by the First tier Tribunal) for incorrect issuance of a VAT zero rating certificate for construction work on a new club house. The UT...
The amending Directive permitting member states to reduce the VAT rate on electronic books came into effect on 4 December. The EU press release comments as follows: For physical publications – books, newspapers and periodicals – member states currently have...
The Taxes Acts allow taxpayers to ask for an independent review of an appealable decision by HMRC. The review is carried out by an independent officer within HMRC’s Appeals and Reviews teams. However, recent evidence suggests that many taxpayers remain...
With effect from 1 January 2019 the VAT treatment of vouchers in the UK will be brought in line with the treatment in other EU countries. The new rules will widen the definition of a single purpose voucher to include...
Some businesses within the insurance sector have been taking advantage of offshore loop arrangements to gain a VAT advantage. Businesses have entered into arrangements with entities located outside the EU to loop or resupply services carried out in the UK....
The Advocate General has issued the CJEU opinion in the case of Morgan Stanley (case C-165/17). The opinion is not yet available in English, so the link provided is to the French translation. The opinion, if followed by the CJEU,...
For those who are familiar with the way the old online or paper HMRC error correction form VAT652 looked, it may have come as a bit of a shock to see the newly implemented version 2.0 of the form that...
The First tier Tribunal has held that an agreement made at an ADR meeting between HMRC and the Serpentine Trust (a registered charity), on the VAT treatment of supporter payments for which certain benefits were given, could not stand as...
The First tier Tribunal has held that an extension to the Roman Catholic Church of Westminster, met the conditions to be an independently functioning annexe, so that the works met the requirements to be zero rated for VAT. Background HMRC...
HMRC has issued VAT information sheet 7/18 and R&C Brief 6/2018 on applying the correct VAT treatment to domestic service charges. In 1994 HMRC introduced an Extra Statutory Concession (ESC) to afford the same VAT treatment to residential freeholders as...
The First tier Tribunal (FTT) has held that Rowhildon Ltd did have the evidence that it made the option to tax on the required date, so that they fell within HMRC’s practice of permitting belated notification in certain cases. Background...
HMRC has issued guidance on MTD – how VAT business and other VAT entities can get ready for the 1 April 2019 commencement date for those VAT businesses that are above the £85,000 VAT registration threshold. Part of the requirements...
The Government has announced the issue of 25 technical notes discussing how various aspects of the economy might operate in the event of a Brexit no-deal scenario. Further technical notes are due in September. The announcement comments: “A scenario in...
Included within the Government’s 25 technical notes for business on preparing for a Brexit no-deal scenario is a note discussing VAT for business if there is no Brexit deal. It reassures business that the UK will continue to have a...
The Supreme Court has allowed HMRC’s appeal and held that Taylor Clark Leisure plc (TCL) was not entitled to the repayment resulting from a successful reclaim for overpaid VAT by a former member of its VAT group. The press release...
The Court of Appeal has rejected Zipvit’s appeal against the Upper Tribunal’s decision that it was not entitled to recover VAT on the cost of services supplied to it by the Royal Mail. Zipvit's claim to recover input tax was...
HMRC’s latest agent update includes comments on the procedures for agents signing clients up for MTD. It highlights the need to have MTD compatible software. A May 2018 HMRC webinar aimed at agents considering signing clients up to the MTD...
The UK Government and the EU issued a joint statement on 19 June 2018 providing an update on the latest areas of agreement in the draft legal text of the Withdrawal Agreement. Since March 2018 new agreements have been reached...
HMRC has published a draft statutory instrument, explanatory note and tax information and impact note (TIIN) for the introduction of the VAT reverse charge for the construction services with effect from 1 October 2019. The measure is being introduced due...
The Upper Tribunal (UT) has upheld the First tier Tribunal’s decision that Summit Electrical Installation Ltd’s supplies of electrical installations in the construction of student accommodation in Leicester, were not precluded from being zero rated by a requirement of planning...
The First-tier Tribunal (FTT) has examined a case (Healthspan Ltd) concerning cross border supply of goods from a business in Holland to individual UK customers. In contrast with the business, the FTT considered that goods ordered by phone and those...
In the case of a retail promotional scheme undertaken by Marks & Spencer plc, the First tier Tribunal (FTT) has held that consideration for the supply must be allocated across all items in the package, rather than treating (in this...
The Upper Tribunal (UT) has confirmed the First tier Tribunal (FTT) decisions on VAT issues arising from reclaims submitted in respect of a points based reward scheme operated by the Marriott Hotel group. The decision is dependent on the facts...
HMRC has released news on an agreement that online market places are being asked to sign up to, as part of HMRC’s strategy to improve the UK VAT compliance of those selling goods through online platforms. Those who sell goods...
On 19 March 2018 the EU and UK reached agreement on the withdrawal arrangements for Brexit. The UK will leave the EU on 29 March 2019, but the transition period will last until 31 December 2020. In relation to Customs...
Following the date of Royal Assent of Finance Act 2018 (15 March 2018) online market places can be held jointly and severally liable for the VAT of non-UK established sellers operating on their market place (section 38 of that Act introducing...
St Brendan’s Sixth Form College has succeeded in overturning HMRC’s refusal to approve zero rating of the construction of an additional college building. The building (building D) was constructed to replace an old temporary accommodation for the College’s teaching activities....
News Corp UK & Ireland Ltd has failed in its attempt to hold that the digital supply of newspaper should be zero rated. In the First tier Tribunal’s view, the decision on whether zero rating applied depended on the objective...
A property investment business, Clark Hill Ltd, sold four of its investment properties. It had raised VAT invoices in respect of all of them, but had not paid over the VAT, contending that in fact the TOGC provisions applied to...
Four documents relating to VAT were released as part of the 2018 Spring Statement. Building on recent measures to tighten up on the portion of the VAT gap arising from online market activity, there is a further consultation and call...
This note summarises points arising from four recent VAT cases heard at the First tier Tribunal (FTT). Newcastle under Lyme College was permitted to submit a late appeal against HMRC’s refusal to refund VAT on the construction of a college...
A regulation (SI 2018/261) amending the VAT regulation SI 1995/2518 has been issued providing that VAT registered businesses above the VAT registration threshold must keep electronic records and use an approved form of functionally compatible software to prepare and submit...
In the case of Super Car Drive Days Limited the First tier Tribunal has held that a payment of between £30 and £50 for waiving the requirement to pay the first £2,500 of any collision damage, was a taxable supply...
The First tier Tribunal (FTT) has held that money pledged on a crowdfunding platform in return for the provision of services to be provided, represented the supply of a single purpose face value voucher, with VAT due at the time...
The First tier Tribunal (FTT) has considered a procedural case (with no findings of fact) concerning potential VAT at stake of around £27m if the supplies are deemed to be made in the UK. The case concerned legal issues relating...
The First tier Tribunal (FTT) has held that a membership scheme operated by Harley Davidson Europe Ltd (HDE) for those interested in belonging to the Harley Owners’ Group (HOG), did not represents a single stand rated supply of membership (wherever...
VAT registration threshold Despite the suggestions that had arisen from a recent report published by the Office of Tax Simplification; the Chancellor has opted not to reduce the VAT registration threshold – leaving it at £85,000. The Chancellor has decided...
The Upper Tribunal (UT) has held that the First tier Tribunal’s (FTT) decision to refuse Mr Akaster a DIY housebuilders' refund (under VATA 1994 s.35) of input VAT incurred on the construction of a residential property was flawed and had to...
The Upper Tribunal (UT) has overturned the First Tier Tribunal (FTT) to hold that a sale and leaseback does result in an entire disposal of a property. This meant that the sale and leaseback resulted in a self-supply attracting VAT...
One of the measures originally proposed for Finance Act 2017, but deferred for inclusion in Finance Bill 2017-19 (currently clauses 48-59) is the new procedures for fulfilment houses. This new legislation requires third country fulfilment goods businesses to register with...
Following the CJEU case concerning Card Protection Plan (case C-349/96), and an HMRC 2002 consultation on the VAT treatment of pension fund management services, UK policy continued to allow insurers to exempt their supplies of pension fund management services. This...
The CJEU has held that a contract for hire of goods that includes a purchase option for the final instalment payment, should only be treated as a supply of goods where the terms of the contract make that purchase the...
The European Commission (EC) has announced plans for a significant reform of the EU VAT system. The biggest changes will be to the VAT treatment of business to business intra-EU cross border supplies. This would involve collection by the Revenue...
The Inner House of the Scottish Court of Session has dismissed HMRC’s appeal concerning a £400m VAT reclaim of Findmypast Ltd covering the period September 2008 to May 2012. It held that unused customer credits of an on-line genealogical and...
The First tier Tribunal (FTT) has held that the cross border, intragroup supply of analytical and monitoring software for investment fund management was a single composite supply of standard rated services. This was on the basis that the services formed...
The Upper Tribunal (UT) has agreed with the First tier Tribunal (FTT) in MacPherson and reversed the decision in Languard New Homes Ltd. The UT heard the two cases together because they both concerned the same point of law. The...
HMRC has failed to exploit the difference of opinion expressed by the minority in the Supreme Court’s decision in Loyalty Management UK Ltd (LMUK) in a First tier Tribunal (FTT) case concerning the Tesco Clubcard loyalty reward scheme run by Tesco...
The Advocate General (case C-164/16) has indicated that Mercedes Benz Financial Services Ltd’s ‘agility contract’, providing for a fixed lease period and an option to purchase the vehicle at the end of the contract, could be a supply of services...
In a case (Litdana UAB, Case C-624/15) concerning the second hand margin scheme applying to cars, the CJEU has held that a taxpayer acting in good faith cannot be prevented from applying the second hand margin scheme. This was subject...
It is said that the real sign that a ship is in trouble is not when the rats jump overboard but when the officers abandon it mid-voyage. If that’s the case, HMRC appears to be sinking because a number of...
The Chancellor announced an increase to the VAT registration threshold to £85,000 and deregistration threshold to £83,000. This will be effective from 1 April 2017 but is not expected to have any significant economic impact. In an announcement which may...
A number of VAT measures have been announced targeting what HMRC describe as abusive use of the Flat Rate Scheme (“FRS”), and VAT avoidance and evasion. FRS is a simplified VAT accounting scheme for small businesses. The scheme allows businesses...
Following HMRC’s ongoing battle against missing trader intra-community (MTIC) fraud, and the announcement in January 2016 introducing the domestic reverse charge in relation to supplies made of telecommunication services, HMRC have recently published new guidance on the matter. Although the...
HMRC have recently published a Revenue and Customs Brief to clarify the change in their historic position which precluded, for VAT purposes, a single dwelling to be formed from more than one building. Following the cases of Mark Catchpole and...
In a previous edition of Hot Topics we looked at the First Tier Tribunal (FTT) case of Caithness Rugby Football who successfully convinced the court that services supplied to it in relation to its clubhouse qualified for zero-rating as the...
This case has now been through both the First Tier Tribunal (FTT) and the Upper Tribunal (UT). Both tribunals agreed with the taxpayer (Longridge), however HMRC have again appealed the decision and have won in the Court of Appeal. Longridge...
HMRC have again extended the transitional period regarding changes to the existing treatment of VAT relating to pension costs and the introduction of a new method following the decision of Fiscale Eenheid PPG Holdings BV cs te Hoogezand IC-26/12) (PPG)...
The issue at hand in the First-Tier Tribunal (FTT) centred around whether the supplies of welfare services by Life Services Ltd were to be treated as VAT exempt (under the provisions of Item 9 Group 7 Schedule 9 VAT Act...
HMRC have recently implemented a change of policy and introduced the Customs Comprehensive Guarantee (CCG) and we are aware that the change and has meant some businesses are experiencing problems when renewing their customs special procedures. A CCG is an...
An important reminder to consider whether a partial exemption special method (PESM) will remain applicable after a change in circumstances. In a recent decision in the First Tier Tribunal (FTT) regarding Dynamic People Ltd, the judge commented that she was...
The Upper Tier Tribunal (UTT) has recently dismissed the ZipVit Limited appeal against HMRC's denial of input tax claims made in respect of ZipVit’s purchases from the Royal Mail. The main argument in this case stems from Royal Mail’s historic...
The Upper Tier Tribunal (UTT) has returned its decision in the case of Iveco Ltd. Iveco – a distributor of commercial vehicles – had initially accounted for VAT on the full sales price of its vehicles without claiming a reduction...
Having seen School of Audio Engineering (SAE) initially win its appeal at the FTT, HMRC has won its own appeal at the UTT. The case is centred on whether SAE qualifies as an eligible body (within the meaning of Note...
HMRC policy previously stated that where a member of a VAT group acquires a business, and afterwards the only supplies are made to other members of that VAT group, the acquisition cannot be treated as a TOGC. The logic behind...
The Upper Tier Tribunal (UTT) have reached a conclusion in The University of Huddersfield Higher Education Corporation appeal and have dismissed it stating that it was a tax avoidance scheme. As the University is a partially exempt business, to try...
HMRC issued a consultation document ‘Strengthening the Tax Avoidance Disclosure Regimes for Indirect Taxes and Inheritance Tax’ on 20 April 2016, for which response are requested by 13 July 2016. This article focuses on the proposals in respect of VAT...
This measure targets non-VAT compliance by overseas traders that sell goods via online marketplaces. HMRC’s power to direct overseas businesses to appoint a VAT representative with jointly and liable will be strengthened and made more effective HMRC will also be...
Reduced rating of energy-saving materials Changes to the reduced rating of energy-saving materials, due take effect from 1 August 2016, are intended to retain as much of the relief as is permissible under EU law following infraction proceedings before the...
Currently, under UK VAT law the supply and installation of energy saving materials in residential accommodation is subject to the reduced rate of VAT. In 2012 the European Commission first launched infraction proceedings against the UK, arguing that the UK’s...
VAT charged on women’s sanitary products to be used to fund women’s health and support women’s charities. In 2000 VAT on women’s sanitary products was reduced from the then standard rate of 17.5% to the 5% (i.e. the reduced rate)....
Academy schools are among the group of entities allowed to recover VAT incurred on non-business activities. Sixth Form Colleges in England will be given the opportunity to become academies. Academies have the advantage of being entitled to recover VAT on...
On 5 October, the OECD has issued the Final Reports on the BEPS 15 Action points and it is expected that the G20 Finance Ministers will discuss and endorse the Reports and the recommended changes at their meeting on 8...
The Supreme Court in HMRC v Pendragon plc & others found for HMRC, reversing the earlier Court of Appeal decision. A motor dealer implemented a scheme that made use of special VAT arrangements for second hand goods to avoid VAT...
Leaving aside the niceties of a government feeling it necessary to impose a law on itself it is telling to consider what is and isn’t within the scope of the tax lock. We have been told that the target is...
The Chancellor announced a change to the partial exemption rules that will prevent UK businesses including supplies made by foreign branches in their VAT recovery methods. VAT scheme to be introduced for palliative care charities. VAT registration and deregistration thresholds...
HMRC has issued its response on the recent, and much talked about, decision of the CJEU in the Skandia case. As anticipated it is very much an instruction to UK businesses to “wait and see.” Before we look at HMRC’s...
HMRC have released their reaction to two ECJ cases that considered the VAT treatment of Investment Management services bought in by pension funds: · Fiscale Eenheid PPG holdings BV cs te Hoogezand (C-26/12), HMRC Brief 43 (2014) VAT on pension...
The Upper Tier Tribunal (UTT) has rejected HMRC’s appeal against the decision of the First Tier Tribunal (FTT) in the case of Longridge on the Thames in connection with zero rating for VAT. The case concerns the zero rating on...
VAT exemption extends beyond fees to any other supplies which are closely related to the supply of education by an eligible body provided these other supplies are for the direct use of the pupil, student or trainee. Thus the VAT...
The tax tribunal has sided with HMRC and imposed VAT on membership fees charged by a brokers’ alliance (link to decision). The specifics of the services the company that set up the alliance performed for the brokers sealed their VAT...
The Upper Tribunal, in overturning the FTT, have decided that structuring by the University of Huddersfield (HU) to mitigate irrecoverable VAT on the cost of refurbishing a building should be disregarded. (more…)
The decision of the Court of Justice of the European Union (ECJ) in K Oy- Case C-219/13 could have a major impact on publishers of books in non-print formats (e-books and possibly CD/DVDs. (more…)
11 days after the warm welcome and endorsement of the 7 Deliverables (2014) by the G20 in Cairns, the OECD published a revised calendar for stakeholders' input. The announcement emphasized that the timeline of the OECD/G20 Base Erosion and Profit...
The ECJ has released its decision in the Skandia American Corporation Case. It is a decision that could have a significant impact on the Financial Services sector. (more…)
This September is a very challenging and landmark period for the international tax world. The OECD releases its first recommendations for a co-ordinated international approach to combat tax avoidance by multinational enterprises under the OECD/G20 Base Erosion and Profit Shifting (BEPS)...
The Airtours case concerned Airtours’ claim to recover VAT on fees it paid to PwC for a financial due diligence report for its creditors. In a split decision the Court of Appeal dismissed the taxpayer’s appeal, holding that PwC supplied...
The Tribunal has released its judgement in the Taylor Wimpey case which concerned whether HMRC was correct to deny input tax recovery to developers on the purchase of white goods that were sold along with new dwellings. In a very...
As announced in Budget 2014 HMRC is consulting until 19 September 2014 on ways to improve on the existing tax advantages provided to SMEs under the Enterprise Investment Scheme (EIS), Seed EIS (SEIS) and Venture Capital Trust scheme (VCT). (more…)
In Mercedes-Benz Financial Services UK Ltd the Upper Tribunal had to decide if a particular hire purchase contract constituted a supply of goods or a supply of services. Although the distinction made no difference to the ultimate overall amount of...
A Tribunal case (Lafferty) highlights the approach to determining whether income is received as principal or as undisclosed agent. A taxi firm makes cars available to drivers who pay a hire charge based on weekly mileage. The car has a...
In 2009 BT made a claim for VAT bad debt relief in respect of the period from 1978 to 1989 on the basis that the EU directive gave it entitlement to bad debt relief that was denied by the domestic...
Businesses that make both taxable and exempt supplies that use the standard partial exemption (PE) method must so far as possible allocate supplies they receive to their taxable and exempt activities. A portion of the VAT on residual supplies is...
The High Court handed down its ruling in the Littlewoods Retail Limited case concerning whether taxpayers are entitled to compound interest on repayments of overpaid VAT. Currently VAT law provides for simple interest to be paid on overpayments and interest...
From 1 January 2015 changes will be made to the place of supply of intra-EU B2C (business to consumer) supplies of telecommunications, broadcasting and e-services. The changes, originally announced in the 2013 Budget, will be introduced in Finance Bill 2014....
Missing trader fraud has been a constant problem for HMRC. Those perpetrating it used many types of supply to conceal their fraud, such as computer chips and mobile phones. HMRC have sought to frustrate the fraud by shifting the requirement...
Businesses that offer prompt payment discount and their customers will have an added VAT burden. A supplier has to calculate the amount of VAT at the time the invoice is issued. Suppliers offering a prompt payment discount cannot be sure...
HMRC has amended its policy on an employer’s entitlement to VAT recovery on services relating to the administration and management of a defined benefit pension scheme. This is in response to the landmark judgment of the Court of Justice of...
An adverse decision of the Tax Tribunal leaves a company with an unexpected £1m VAT bill on the sale of its business. The case is a salutary illustration of VAT complexity on what at first sight may appear to be...
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