V@ update - April 2021

Published on 29 April 2021

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


  • HMRC has published Revenue and Customs Brief 3 (2021): VAT liability of digital publications – update on litigation in News Corp and Ireland Ltd. The brief replaces Revenue and Customs Brief 1 (2020) and provides an update on the VAT treatment of supplies of digital newspapers and other digital publications before 1 May 2020, following the Court of Appeal's decision in HMRC v News Corp UK & Ireland Ltd [2021] EWCA Civ 91.
  • HMRC has updated its guidance Changes to notifying an option to tax land and buildings during coronavirus (COVID-19). The guidance temporarily extends the time limit to notify HMRC of a decision to opt to tax land and buildings from 30 to 90 days, from the date the decision to opt was made. The updated guidance extends the effect of this change so that it applies to decisions made between 15 February 2020 and 30 June 2021.
  • HMRC has published Revenue and Customs Brief 4 (2021): partially exempt VAT registered businesses affected by coronavirus (COVID-19). The brief provides information on an accelerated process by which VAT registered businesses can request temporary alterations to their partial exemption methods (including combined methods) to reflect changes to their business practices due to the coronavirus pandemic. The brief is relevant to partially exempt business whose trading activities have been affected by coronavirus, as a result of which their existing partial exemption method does not provide a fair and reasonable result.
  • HMRC has published VAT partial exemption and Capital Goods Scheme - summary of responses, subsequent to its July 2019 request for evidence regarding the simplification of the VAT partial exemption and the Capital Goods Scheme regimes. The request was made following the recommendations of the report by the Office of Tax Simplification. The summary of responses also details certain interim changes and proposed next steps.

Case reports

Prudential Assurance Company – FTT applies VAT group registration and time of supply rules in deciding that supplies were outside the scope of VAT

In The Prudential Assurance Company Ltd v HMRC [2021] UKFTT 0050 (TC), the Prudential Assurance Company (Prudential) was the representative member of a VAT group. In 2002, it entered into an investment management agreement (the Agreement) with another member of the same VAT group, Silverfleet Capital Ltd (Silverfleet), under which the latter received consideration for investment management services which comprised both a management fee and a performance fee. In 2007, Silverfleet was bought out and as a result ceased to be a member of Prudential's VAT group. Silverfleet ceased to provide investment management services to Prudential and the Agreement was varied such that Silverfleet no longer had an entitlement to management fees, only performance fees. The benchmark rate of return to trigger the performance fee was reached during 2014 and 2015, and Silverfleet invoiced Prudential for its fees. Read more

Lilias Graham Trust – UT decides that accommodation forming part of a single supply of welfare services is not excluded from exemption

In The Lilias Graham Trust v HMRC [2021] UKUT 36 (TCC), the Lilias Graham Trust (the Trust) was a charity which provided a residential assessment centre where it assessed the parenting capacities of those referred to it by a local authority in return for a fee charged to that authority. The FTT had held, contrary to the Trust's case, that its supplies were exempt supplies of “welfare services” under Item 9, Group 7 Schedule 9, VATA 1994, being directly connected to the care or protection of children. The Trust accepted that conclusion and did not seek to appeal it. Read more

Wellcome Trust – CJEU confirms reverse charge applies where a taxable person receives services relating to non-economic activities carried out in a business capacity

In HMRC v Wellcome Trust Ltd (Case C-459/19), the Court of Justice of the European Union (CJEU) followed the opinion of Advocate General Hogan in holding that the place of supply of services provided by a non-EU supplier to a UK taxable person, for the purposes of its non-economic business activities, was the place where the recipient belonged, confirming that section 7A, VATA 1994, was not contrary to EU law. Read more


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