V@ update - January 2021

Welcome to the January 2021 edition of RPC's V@, an update on developments in the VAT world that may impact your business.

News Items

• The Cabinet Office has updated its guide The Border Operating Model, to reflect the UK-­EU trade and cooperation agreement which was agreed on 24 December 2020. Border Operating Model case studies have also been created to assist businesses when importing and exporting goods from January 2021. Read more 
  
  
• HMRC has launched a new open consultation on VAT and value shifting, which closes on 30 March 2021. The consultation seeks views on a proposed revision of the rules for apportioning the consideration between supplies with mixed liabilities in a single transaction. HMRC notes that the consultation will be of particular interest to businesses that sell goods or services for a reduced price as part of a package or 'bundle'. Read more
  
  
• HMRC has published guidance on the Value Added Tax EU Exit Transitional Provisions, in relation to the VAT treatment of transactions or movements of goods which span the end of the transition period. The guidance is a public notice for the purpose of regulation 11 of the Value Added Tax (Miscellaneous Amendments, Revocation and Transitional Provisions) (EU Exit) Regulations 2019 (SI 2019/513), which allows HMRC to make provisions to deal with specific transitional issues connected to the UK’s exit from the EU. Read more
  
  
•  HMRC has published guidance on how to report supplies of goods from Northern Ireland to VAT­ registered customers in an EU country using an EC Sales List, from 1 January 2021. Read more
  
  
• The Treasury has made three statutory instruments which implement the VAT aspects of the Northern Ireland Protocol: The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020; The Value Added Tax (Northern Ireland) (EU Exit) Regulations 2020; and The Value Added Tax (Miscellaneous Amendments to the Value Added Tax Act 1994 and Revocation) (EU Exit) Regulations 2020. HMRC has also published VAT: Value Added Tax in Northern Ireland, a tax information and impact note about VAT amendments required to implement the Northern Ireland Protocol and (EU Exit) Regulations 2020, after 1 January 2020. Read more 
  
  
• HMRC has published a Call for Evidence paper which seeks stakeholders' views on the government's assessment of the VAT challenges created by the Sharing Economy. HMRC notes that the Sharing Economy, which is usually facilitated by digital platforms which can be based anywhere in the world, could potentially create certain challenges to the VAT tax base. Responses to the paper must be submitted by 3 March 2021. Read more
  
  
• HMRC has published Revenue and Customs Brief 19 (2020): VAT ­ repeal of the VAT (Treatment of Transactions) Order 1992. The brief announces the government's intention to repeal, before autumn 2021, the VAT (Treatment of Transactions) Order 1992, in order to prevent government departments and the NHS claiming full VAT refunds on employees' private vehicles. Read more
  
  
• HMRC has published Revenue and Customs Brief 20 (2020): repayment of VAT to overseas businesses not established in the EU and not VAT registered in the UK. The brief explains the actions HMRC is taking to enable overseas (not established in the EU) businesses to claim VAT refunds where they have had difficulties in obtaining a certificate of status due to the COVID­19 pandemic. This applies to the prescribed year 1 July 2019 to 30 June 2020. Read more
  
  
• HMRC has published Revenue and Customs Brief 21 (2020): withdrawal of the VAT Retail Export Scheme and the tax­free shopping concession. The brief confirms the withdrawal of 'airside' tax­free shopping in the UK and the VAT Retail Export Scheme from Great Britain, following the end of the UK transition period. Read more
  
  
• HMRC has made The Value Added Tax (Amendment) Regulations 2020, which came into force on 1 January 2021. The regulations amend Part 24 of the Value Added Tax Regulations 1995, in relation to the agricultural flat­rate scheme, and introduce new financial conditions for certification to use the scheme. Read more
  
  
• HMRC has updated VAT Notice 701/14 (Food products) and VAT Notice 709/3(Hotels and holiday accommodation), to reflect the extension of the VAT reduced rate for tourism and hospitality from 12 January to 31 March 2021. Read more

Case reports

Y­GmbH ­ CJEU confirms that a sequential number is not always required for a successful VAT refund application

Bundeszentralamt für Steuern v Y­GmbH (Case C­346/19) concerned an Austrian company (Y) which made an application to the Federal Central Tax Office (FCTO) in Germany for a VAT refund by means of the electronic portal made available to it in its Member State of establishment. Read more

Colchester Institute ­ UT confirms that educational courses provided free of charge to students and funded by government grants were a supply of services for consideration

In Colchester Institute Corporation v HMRC [2020] UKUT 368 (TCC), the Upper Tribunal (UT) held that education and vocational training provided by Colchester Institute Corporation (CIC) free of charge to students and funded by grants from two government funding agencies was a “supply of services for consideration” for the purposes of Article 2(1)(c), Principal VAT Directive (PVD). Read more

The Core (Swindon) Ltd ­ UT confirms that the supply of juice cleanse programmes was zero rated

In HMRC v The Core (Swindon) Ltd [2020] UKUT 0301 (TCC), the UT confirmed that the supply by The Core (Swindon) Ltd (TCSL) of fruit and vegetable juices (referred to as juice cleanse programmes (JCPs)), which were sold as meal replacements, were zero­rated supplies of food, rather than standard­rated supplies of beverages, within Schedule 8, Part 2, Group 1, VATA 1994. Read more

Revive Corp Ltd ­ UT sets aside decision of the FTT because it had not adequately explained its reasons for concluding that a company should have known that its transactions were connected with VAT fraud

In Revive Corporation Ltd v HMRC [2020] UKUT 0320 (TCC), the UT set aside a decision of the FTT, concluding that the FTT had not given adequate reasons for concluding that Revive Corporation Ltd (RCL) should have known that certain of its transactions were connected with VAT fraud (applying the principles that the CJEU set out in Kittel v Belgium [2008] STC 1537). Read more

Eurochoice ­ company and its director held jointly and severally liable for HMRC's costs

In Eurochoice Ltd v HMRC [2020] UKFTT 0449 (TC), the FTT held Eurochoice Ltd (Eurochoice) and Mr Salman Ahmed, its sole director, jointly and severally liable for HMRC's costs in circumstances where only the company was party to the appeal proceedings. Read more