Outside view of RPC's transparent glass building.

VAT update June 2019

Published on 21 June 2019

In this month’s update we report on (1) amendments to the reduced VAT rate for energy-saving materials; (2) HMRC’s guidance on the VAT reverse charge on construction services; and (3) HMRC’s updated VAT Notice 700/1 – who should register for VAT.

We also comment on three recent cases relating to (1) whether overpayments are consideration for VAT purposes; (2) the validity of a default surcharge notice; and (3) whether a salary sacrifice scheme under which cars were leased to employees was an economic activity.

News items

Amendments to the reduced VAT rate for energy-saving materials

On 20 May 2019, the Value Added Tax (Reduced Rate) (Energy Savings Materials) Order 2019 (SI 2019/958) was made, amending the scope of the reduced VAT rate of 5% for energy-saving materials to ensure consistency with EU law. Read more.

HMRC Guidance on the VAT reverse charge on construction services

On 7 June 2019, HMRC published Guidance on the VAT domestic reverse charge for building and construction services that comes into effect on 1 October 2019. Read more.

Updated Notice on who should register for VAT

On 13 June 2010, HMRC updated VAT Notice 700/1 – who should register for VAT. Read more.


National Car Parks – are overpayments consideration for VAT purposes?

In National Car Parks Ltd v HMRC [2019] EWCA Civ 854, the Court of Appeal has confirmed that excess amounts paid by customers at pay and display car parks were consideration for VAT purposes. Read more.

Gravitas – default surcharge liability notice was valid

In Gravitas Group Ltd v HMRC [2019] UKFTT 324 (TC), the FTT has dismissed the taxpayer’s appeal against a VAT default surcharge, despite finding that the subsequently withdrawn surcharge liability notice (SLN) had been issued erroneously by HMRC. Read more

Northumbria Healthcare – salary sacrifice car leasing scheme not an economic activity

In Northumbria Healthcare NHS Foundation Trust v HMRC [2019] UKUT 170, the UT has found that the effect of the VAT (Treatment of Transactions) Order 1992/630 (the de-supply order), was that a trust, which provided leased cars to employees, was not carrying on an economic activity. Read more.