V@ update - August 2020

Welcome to the August 2020 edition of RPC's V@, an update on developments in the VAT world that may impact your business.

News

The Value Added Tax (Zero Rate for Personal Protective Equipment) (Extension) (Coronavirus) Order 2020 has been made, which extends the expiry date for the zero­rating of personal protective equipment, provided for in Group 20, Schedule 8, Value Added Tax Act 1994 (VATA 1994), from 31 July 2020 until 31 October 2020.

HMRC has published guidance and a policy paper in relation to the temporarily reduced rate of VAT on supplies relating to hospitality, accommodation, or admission to certain attractions, as well as specific guidance in relation to the attractions which are eligible for the temporary reduced rate.

HMRC has published a policy paper on changes to the VAT treatment of overseas goods sold to customers in Great Britain from 1 January 2021. This follows the publication, on 13 July 2020, of The Border Operating Model, which outlines the processes for moving goods between Great Britain and the EU from 1 January 2021, including processes to be introduced in April 2021 and July 2021.

The Charity Tax Group has published a letter from HMRC, dated 20 July 2020, in which HMRC has confirmed that five categories of digital advertising are not caught by Note 10A, Group 15, Schedule 8, to the VATA 1994, and are therefore eligible for zero­rating.

HMRC has published guidance in relation to when, from 1 January 2021, UK VAT­ registered businesses can, or need to, account for import VAT on their VAT return (also called postponed VAT accounting).

HMRC has published Revenue and Customs Brief 11 (2020), which provides guidance on the appropriate VAT and Stamp Duty Land Tax treatment of the most common lease variations in relation to commercial properties (which have become more frequent as a result of the COVID­19 pandemic).

The Official Journal has published three measures (Council Regulation (EU) 2020/1108, Council Decision (EU) 2020/1109, and Council Implementing Regulation (EU) 2020/1112), all of which were adopted on 20 July 2020, which delay the implementation of the EU's VAT e­commerce package by six months (until 1 July 2021), in response to the COVID­19 pandemic.

HMRC has updated its VAT Notice 701/10 on the zero­rating of books and printed matter, to include a new section 9 which provides guidance on the zero­rating of supplies of certain e­publications, which has been effective since 1 May 2020.

Case reports

Northumbria Healthcare NHS Foundation Trust – Court of Appeal confirms that NHS Trust was entitled to a refund under the contracted out services regime in respect of the provision of cars to its employees

In HMRC v Northumbria Healthcare NHS Foundation Trust [2020] EWCA Civ 874, the Court of Appeal upheld the decision of the Upper Tribunal (UT) that the Northumbria Healthcare NHS Trust (the Trust) was entitled to a refund, under section 41(3), VATA 1994, of the VAT it incurred when it acquired cars which it provided to its employees as part of a salary sacrifice scheme. Read more

Milton Keynes Hospitals NHS Foundation Trust Upper Tribunal decides that HMRC are entitled to assess under section 73(2) VATA 1994 in respect of VAT overclaimed by an NHS Trust under the contracted out services system

In Milton Keynes Hospitals NHS Foundation Trust v HMRC [2020] UKUT 231 (TCC), the UT upheld the decision of the First­-tier Tribunal (FTT) that HMRC had the power to recover an amount of VAT that, according to HMRC, had been overclaimed by the Milton Keynes Hospitals NHS Foundation Trust (the Trust) under section 41, VATA 1994, in respect of expenditure on IT equipment, by way of an assessment under section 73, VATA 1994. Read more

Europcar Group UK Ltd ­First-­tier Tribunal finds that the letting of a car with a child car seat by a car rental company constitutes two separate supplies

In Europcar Group UK Ltd v HMRC [2020] UKFTT 249 (TC), the FTT agreed with Europcar that the letting of a car with a child car seat constituted, for VAT purposes, a separate supply of the car (standard rated) and the car seat (reduced rate of 5%). Read more