Simmons & Simmons monthly contribution to Tax Journal analysing recent VAT developments.
This article was first published in the 06 April 2018 edition of Tax Journal who have agreed to Simmons & Simmons making it available on elexica.
This month’s developments highlight the limits on the UK’s ability to determine its own VAT policy within the EU. The alleged ultra vires extension of zero-rating under the Terminal Markets Order (TMO), the inability to extend zero-rating to e-newspapers pursuant to an ancient derogation and the restrictions on what action the UK might take in relation to VAT registration thresholds all emphasise the way in which the VAT system is subject to the EU wide set of rules with which member states must comply. The extent to which Brexit may provide opportunities to lift some of these restrictions and enable a UK government to implement its own VAT rules based on social and fiscal policy considerations is, therefore, an intriguing one. That said, the prospect of unconstrained tinkering with the VAT rules for short-term political reasons is not one which many would find appealing.
Other developments covered this month include the Advocate General’s opinion on the scope of the exemption for "transactions concerning payments or transfers" in HMRC v DPAS, HMRC’s guidance on the restriction to the cost sharing exemption following the ECJ decisions in DNB Banka and Aviva, the Upper Tribunal decision on the consequences of a failure by HMRC to offer a review of an appealable penalty notice in HMRC v NT ADA Ltd and the FTT decision on whether the grant of a timeshare for an annual short term stay in a property which was comparable with a small boutique hotel was a standard rated supply of accommodation in a hotel "or similar establishment" in Fortyseven Park Street Ltd v HMRC.
The VAT Briefing for April 2018 can be read here.
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