VAT update July 2019
In this month’s update we report on (1) the revocation of the VAT (Finance) (EU Exit) Order; (2) a recent HMRC Brief that clarifies HMRC’s policy on the scope of VAT for transport services; and (3) new regulations which amend the rules on when VAT adjustments may be made following a change to the price of goods and services.
We also comment on three recent cases relating to (1) the VAT treatment of ‘free’ wine supplied as part of a promotional offer; (2) the meaning of “deliberate” and “concealed” behaviour for the purposes of assessment time limits and penalties; and (3) whether investment management fees are recoverable as part of a university’s overheads.
News items
VAT (Finance) (EU Exit) Order 2019 revoked
On 12 June 2019, the Value Added Tax (Finance) (EU Exit) (Revocation) Order 2019 (SI/2019/1014) was made. The Order revokes the Value Added Tax (Finance) (EU Exit) Order 2019 (SI/2019/43) from 8 July 2019, to permit a change of commencement date using another instrument. Read more
Revenue & Customs Brief 3 (2019): the scope of VAT for transport services
On 14 June 2019, HMRC published Revenue & Customs Brief 3/2019, clarifying its policy on the scope of the VAT zero rate for transport services following the Upper Tribunal’s decision in Jigsaw Medical Services Limited v HMRC [2018] UKUT 0222. Read more
New regulations amending the rules on when VAT adjustments may be made following a change to the price of goods and services
On 25 June 2019, the Value Added Tax (Amendment) Regulations 2019 (SI/2019/1048), amending the rules on when VAT adjustments may be made following a change to the price of goods and services, were made. The Regulations will come into force on 1 September 2019. Read more
Cases
Marks & Spencer – ‘free’ wine supplied as a promotional offer was subject to VAT
In Marks and Spencer plc v HMRC [2019] UKUT 0182 (TCC), the UT has upheld the First-tier Tribunal’s (FTT) decision that wine supplied ‘free of charge’ as part of a promotion was subject to VAT. Read more
Anthony Leach – taxpayer’s behaviour was “deliberate” and “deliberate and concealed” for the purposes of assessment time limits and penalties
In Anthony Leach v HMRC [2019] UKFTT 352 (TC), the FTT considered the meaning of “deliberate” behaviour, for the purpose of section 77, Value Added Tax Act 1994 (VATA) (assessment time limits) and the meaning of “deliberate and concealed”, for the purposes of Schedule 24, Finance Act 2007 (FA 2007) (penalty provisions). Read more
University of Cambridge – VAT on investment management fees were not recoverable as part of the university’s overheads
In HMRC v The Chancellor, Masters and Scholars of the University of Cambridge (Case C-316/18), the Court of Justice of the European Union (CJEU) has confirmed that in raising and collecting donations and endowments the university was not acting as a taxable person. Read more