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The impact of the new EC Single Market Strategy for supplies of digital services, compound interest judgment, together with new and updated VAT notices and forms, are just some of the topics covered in our latest VAT update.

This article outlines recent HMRC announcements and reports on the VAT issues affecting businesses and organisations.

Digital Single Market Strategy
On 6 May 2015, the European Commission released details of its strategy to create a Digital Single Market. The strategy, containing 16 targeted actions, includes a proposal to make legislative changes in 2016 to reduce the administrative burden businesses face from different VAT regimes, and will apply to both e-services and to goods sold online. The planned VAT changes are to include:

  • setting a common EU-wide VAT threshold;
  • extending the VAT Mini One Stop Shop (MOSS) regime to cover distance sales;
  • removing the threshold for low value consignment relief, with the view that there is no distortion, or advantage, for non-EU vendors;
  • assessing the role of platforms and online intermediaries; and
  • issuing legislation to end 'unjustified' geo-blocking (i.e. a commercial practice which allows online sellers either to deny consumers access to a website based on their location, or to re-route them to a local store with different prices)

Budget 2015 – second financial statement
The Government has announced that Wednesday 8 July 2015 will be the date of its second Budget this year, with the key measures likely to include law to prevent income tax, national insurance and VAT rises.

Compound interest
On 21 May 2015, the Court of Appeal released its judgment in HMRC's appeal from the High Court in the case of Littlewoods Ltd. This case concerns the availability of compound interest on overpaid VAT, in circumstances where the VAT was paid and collected in breach of EU law.

Significantly, the Court of Appeal has upheld the High Court's judgment in full. That is, the claimants are entitled to compound interest on the overpaid VAT. Given the figures involved and the implications of this judgment, we expect that HMRC will seek leave to appeal to the Supreme Court. However, for Fleming claims made over a long period, this judgment confirms that compound interest is payable but does add that EU law does not go as far as to require compound interest in every case.

HMRC news

  • HMRC has just added a Welsh version of its form WT2, but it's a good reminder that form WT2 should be used when a surcharge has been received for submitting an online VAT return late and you want to claim 'reasonable excuse. The form can be assessed here 
  • HMRC has agreed to extend the transitional period to 31 July 2015 for suppliers not charging 20% VAT on single sourcing direct mail contracts to charities. HMRC is still to publish proper guidance on the VAT changes, but proposes to issue a Revenue & Customs Brief explaining the VAT changes on 5 June 2015.
  • HMRC has added four new models (i.e. Dacia's) to its list of car derived vans and combi vans. The updated list can be accessed here 
  • HMRC has issued its 47th edition of Agent Update covering the period April to May 2015, which provides a round-up of the latest VAT developments. The Agent Update can be accessed by clicking here 
  • HMRC has updated its VAT notice 700/63: electronic invoicing. This notice explains issuing, receiving and storing VAT invoices in an electronic format and can be accessed here 
  • HMRC has published new guidance on how to register as an agent for VAT Mini One Stop Shop ('MOSS') and receive authorisation from clients to act on their behalf. This guidance can be accessed here 
  • HMRC has provided an updated VAT appeal listing on cases that HMRC has lost and which may have implications for other businesses. The updated listing can be accessed here 
  • HMRC has updated details of Extra Statutory Concessions ('ESCs') that have been granted or become obsolete. The updated notice can be accessed here 

VAT case
On 21 May 2015, the High Court released its judgment in the application for judicial review by Premier Foods concerning HMRC's decision in relation to VAT paid by the former to a supplier, Q Cold (now in administration) who between 2008 and 2012 invoiced it in error (as the relevant supplies should have been zero-rated) and accounted for it to HMRC. This case is interesting as it adds to the increasing case law in which the recipient of a supply, who has mistakenly been charged output tax (VAT) by a supplier, may be entitled to recover the mistakenly charged VAT directly from HMRC.

Contact us

Should you wish further information on the above, please do not hesitate to contact Gary using the details outlined below.

 

Gary Moore
Direct line 0141 636 9353
Mobile 07812 061 582
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