VAT update April 2019

In this month’s update we report on (1) HMRC’s updated guidance on intra-group VAT reverse charge; (2) draft regulations which will tighten the rules on when VAT adjustments may be made following a change to the price of goods and services; and (3) HMRC’s updated policy paper which provides an overview of Making Tax Digital for VAT.

We also comment on three recent cases relating to (1) whether the model VAT grouping in sections 43 and 44, Value Added Tax Act 1994, is compliant with article 11, Directive 2006/112; (2) whether a commercial provider of university education was a ‘college of a university’ for the purpose of note 1(b), item 1, Group 6, Schedule 9, Value Added Tax Act 1994; and (3) the meaning of ‘financial extremity’, for the purpose of section 85B, Value Added Tax Act 1994.

News items

Updated guidance on intra-group VAT reverse charge

On 19 March 2019, HMRC updated VAT Notice 700/2, which sets out guidance for group and divisional VAT registration, to clarify the meaning of ‘bought-in services’ for the purpose of section 43(2A), Value Added Tax Act 1994. Read more

Draft regulations to amend VAT adjustment rules following change to consideration

On 19 March 2019, HMRC published a draft statutory instrument – The Value Added Tax (Amendment) Regulations 2019 – which will amend the rules governing when VAT adjustments may be made following a change to the price of goods and services. Read more

Updated policy paper on Making Tax Digital for VAT

On 1 April 2019, HMRC published an updated policy paper which provides an overview of Making Tax Digital for VAT. Read more

Cases

Lloyds Banking Group – only representative member of a group can reclaim overpaid VAT under section 80, Value Added Tax Act 1994

In Lloyds Banking Group Plc and others v HMRC, the Court of Appeal has held that the VAT grouping model outlined in sections 43 and 44, Value Added Tax Act 1994 is compliant with article 11, Directive 2006/112 (PVD). Read more

SAE Education Ltd – Supreme Court paves the way for commercial higher education providers to claim VAT exemption

In SAE Education Ltd v HMRC, the Supreme Court has set out the correct approach to determining whether a provider of education was a ‘college of such a university’ within the meaning of note 1(b), item 1, Group 6, Schedule 9, Value Added Tax Act 1994 (note 1(b)).  Read more

Snow Factor Ltd – meaning of the phrase ‘financial extremity’

In Snow Factor Ltd v HMRC, the UT has determined the meaning of the phrase ‘financial extremity might be reasonably expected to result from that decision of HMRC’ in section 85(B), Value Added Tax Act 1994. Read more