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V@ update - May 2021

Published on 27 May 2021

Welcome to the May 2021 edition of RPC's V@, an update which provides analysis and news from the VAT world relevant to your business.


  • HMRC has published draft Value Added Tax (Amendment) Regulations 2021, which will extend Making Tax Digital requirements to smaller VAT businesses from April 2022. The regulations amend Regulation 32B of the Value Added Tax Regulations 1995, to remove the exemption from the requirement to keep electronic records for taxpayers whose turnover is below the threshold for compulsory VAT registration.
  • HMRC has published a Call for Evidence on Simplifying the VAT Land Exemption. HMRC seeks views on the current VAT rules relating to land and property, and explores potential options for simplifying the rules. The suggested reforms are very broad and would significantly change the VAT treatment in the UK. The consultation sets out several possible fundamental reforms, including:
    • making all minor and short-term interests in property taxable;
    • removing the ability to opt and making all transactions exempt, or taxable at a reduced rate; or
    • using registration with the Land Registry as the basis of VAT liability.

The consultation closes at 11:45pm on 3 August 2021.

  • HMRC has published updated guidance on the potential dangers posed to businesses and individuals by mini umbrella companies (MUC) in supply chains. HMRC is warning every business which either places or uses temporary labour to be aware of the potential dangers posed to their business by MUC fraud in their supply chain. The guidance includes a number of tips on how individuals can protect themselves from getting involved in MUC fraud. HMRC also list a number of warning signs such as the use of unusual company names, unrelated business activity, foreign national directors, movement of workers and short-lived businesses. The fraud is primarily based around the abuse of two government incentives aimed at small businesses, the VAT Flat Rate Scheme and the Employment Allowance, but this type of fraud can also result in the non-payment of other taxes such as PAYE, National Insurance and VAT.

Case reports

Balhousie Holdings  – Supreme Court decides that sale and leaseback arrangement did not trigger VAT self-supply charge

In Balhousie Holdings Ltd v HMRC [2021] UKSC 11, the taxpayer, Balhousie Holdings Ltd (Balhousie), had built a new care home and sold it to a subsidiary, Balhousie Care Ltd (Care). The sale was zero-rated for the purposes of Item 1, Group 5, Schedule 8, Value Added Tax Act 1994 (VATA), as the building was 'intended for use solely for a relevant residential or a relevant charitable purpose'. Subsequently, Care entered into a sale and leaseback transaction in respect of the care home to a Real Estate Investment Trust. Read more

SK Telecom – CJEU decides that roaming services provided to customers staying temporarily in an EU member state are the subject of 'effective use and enjoyment' in that member state

In SK Telecom Co Ltd v Finanzamt Graz-Stadt (Case C-593/19), SK Telecom Co Ltd (SKT) was a company established in South Korea which supplied mobile phone services to its customers, who were also established, had their permanent address or usually resided in South Korea, by way of roaming services allowing the use of the Austrian mobile communications network. An Austrian mobile communications network operator made its network available to SK Telecom in exchange for the payment of a user fee plus Austrian VAT (the relevant VAT). SKT invoiced its customers roaming charges for using the Austrian mobile communications network during their temporary stays in Austrian territory. Read more

Jupiter Asset Management –  Tribunal decides that the full cost of supplies subject to an open market value direction included overhead costs in respect of which input tax had been recovered

In Jupiter Asset Management Group Ltd v HMRC [2021] UKFTT 96 (TC), Jupiter Asset Management Group Ltd (JAMG), was the representative member of a VAT group (the JAMG group) and a member of a corporate group (the Jupiter Group). Within the Jupiter Group, there was another VAT group (the JIMG group), the representative member of which was Jupiter Investment Management Group Ltd. The appeals which were the subject of the decision related to the VAT input tax and output tax consequences for the JAMG group of certain strategic and operational management services (the Management Services) which were provided by members of the JAMG group to members of the JIMG group over a number of years. Read more