VAT Update October 2018
In this month’s update we report on changes to the VAT treatment of supplies of digital services, the European Parliament’s adoption of changes which are intended to simplify VAT for small businesses and the European Commission’s proposals for VAT rates and intra-EU supplies. We also comment on three recent decisions relating to the VAT option to tax a property third party access to documents filed at the First-tier Tribunal and the validity of Alternative Dispute Resolution agreements that are wrong in law.
News items
Changes to the VAT treatment of supplies of digital services
Following HMRC’s Policy Paper: VAT Changes to the supply of digital services 2019, draft legislation has been published in relation to the rules for businesses making sales of digital services to consumers across the EU. Read more.
VAT simplification for small businesses
On 11 September 2018, the European Parliament adopted a Council Directive amending Directive 2006/112/EC on the common system of VAT, to introduce measures to lower VAT compliance costs for small businesses. Read more.
European Commission’s proposals on VAT rates and intra-EU supplies
On 6 and 7 September 2018, the European Parliament published two reports approving the European Commission’s VAT proposals in relation to VAT rates and intra-EU supplies. The reports were further debated by Parliament at the beginning of October 2018. Read more.
Cases
Rowhildon Ltd – HMRC’s decision to refuse a taxpayer’s belated notification of an option to tax a property was unreasonable
In Rowhildon Ltd v HMRC1, the First-tier Tribunal (FTT) has held that HMRC’s decision to refuse a taxpayer’s belated notification of an option to tax a property was unreasonable. Read more.
Hastings Insurance Ltd – a non-party may access certain documents filed with the First-tier Tribunal
In Hastings Insurance Ltd and HMRC v KPMG3 the FTT granted KPMG, who was neither a party nor a representative of a party, access to certain documents which had been filed with the FTT. Read more.
The Serpentine Trust Ltd – HMRC entitled to raise VAT assessments despite binding contractual agreement on VAT treatment
In The Serpentine Trust v HMRC4, the FTT has held that although HMRC had agreed with the taxpayer one basis for calculating VAT, under alternative dispute resolution (ADR), it was not precluded from raising VAT assessments on a different basis, because the agreement reached was ultra vires and therefore void. Read more.