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The contentious issue of retaining zero-rating evidence for goods leaving the UK was highlighted in a recent decision from a UK court.

This update looks at that ruling and also covers new announcements from the European Commission and HMRC covering a wide range of VAT issues.

VAT zero-rating evidence
In a recent Tribunal case, involving MFS Fuel Supplies Ltd, HMRC was successful in arguing that the appellant failed to qualify for zero-rating relief in providing its supplies of goods to another EU Member State.

Specifically, HMRC contended that the information contained on the appellant's UK sales invoices, together with the documentary evidence of removal of the goods, failed to comply fully with the requirements of HMRC's Public Notice 725; the Single Market (i.e. a notice where some content has force of law).

This is an area continuing to see high activity from HMRC in challenging the VAT zero-rating relief for dispatches and exports of goods from the UK. We have assisted a number of clients in mitigating the VAT assessment and penalties and, importantly, providing advice on the records and evidence that are required to be retained to support the zero-rating relief.

Notifications from the European Commission
On 25 September 2015, the European Commission issued a press release announcing the launch of a public consultation to assist in identifying ways to simplify VAT payment procedures for cross-border e-commerce transactions within the EU.

In particular, the consultation seeks the views of businesses and other interested parties on the current VAT rules for business-to consumer ('B2C') cross-border supplies of goods and services, together with the implementation of the 2015 changes to the EU VAT place of supply rules for B2C supplies of digital services and the Mini One Stop Shop.

We attach a link to the European Commission's consultation, which runs until 18 December 2015, here

Additionally, the European Commission published an updated document summarising the VAT rates applied across the EU Member States as at 1 September 2015 and this publication can be accessed here 

On 7-9 September 2015, the Fiscalis Summit was held in Dublin to discuss how well, or badly, implementation of the new EU VAT rules has gone. The Summit was represented by all 28 EU Member States. From these Summit discussions it was agreed that a threshold should be put in place which will exempt smaller companies from VAT in relation to the new B2C rules covering digital services. We shall provide further details once more information on the proposed arrangements are known.

Notifications from HMRC
HMRC issued a summary document on 17 September 2015, following the consultation (launched on 2 February 2015), concerning the way penalties are applied when taxpayers fail to meet their obligations, as HMRC moves towards more digital services. The consultation was concluded on 11 May 2015. Within the summary document, HMRC confirms that it intends to consult on proposals for a new scheme of penalties for late filing and late payment and, also, inaccuracies.

For late filing/payment, the proposals are likely to include not charging for a first default, and replacing penalties with a penalty interest regime. HMRC expects it to take longer to develop the options for the proposed new inaccuracy penalties and as such, the earliest possible date for the introduction of draft legislation following further consultation would be through Finance Bill 2017. HMRC's document can be accessed here 

Other news
Autumn Statement 2015
The Chancellor of the Exchequer will deliver his Autumn Statement on Wednesday 25 November 2015, with the draft Finance Bill 2016 clauses to be published shortly thereafter that date.


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
Email This email address is being protected from spambots. You need JavaScript enabled to view it.