VAT update June 2019

In this month’s update we report on (1) amendments to the reduced VAT rate for energy-saving materials; (2) HMRC’s guidance on the VAT reverse charge on construction services; and (3) HMRC’s updated VAT Notice 700/1 – who should register for VAT.

We also comment on three recent cases relating to (1) whether overpayments are consideration for VAT purposes; (2) the validity of a default surcharge notice; and (3) whether a salary sacrifice scheme under which cars were leased to employees was an economic activity.

News items

Amendments to the reduced VAT rate for energy-saving materials

On 20 May 2019, the Value Added Tax (Reduced Rate) (Energy Savings Materials) Order 2019 (SI 2019/958) was made, amending the scope of the reduced VAT rate of 5% for energy-saving materials to ensure consistency with EU law. Read more.

HMRC Guidance on the VAT reverse charge on construction services

On 7 June 2019, HMRC published Guidance on the VAT domestic reverse charge for building and construction services that comes into effect on 1 October 2019. Read more.

Updated Notice on who should register for VAT

On 13 June 2010, HMRC updated VAT Notice 700/1 – who should register for VAT. Read more.

Cases

National Car Parks – are overpayments consideration for VAT purposes?

In National Car Parks Ltd v HMRC [2019] EWCA Civ 854, the Court of Appeal has confirmed that excess amounts paid by customers at pay and display car parks were consideration for VAT purposes. Read more.

Gravitas – default surcharge liability notice was valid

In Gravitas Group Ltd v HMRC [2019] UKFTT 324 (TC), the FTT has dismissed the taxpayer’s appeal against a VAT default surcharge, despite finding that the subsequently withdrawn surcharge liability notice (SLN) had been issued erroneously by HMRC. Read more. 

Northumbria Healthcare – salary sacrifice car leasing scheme not an economic activity

In Northumbria Healthcare NHS Foundation Trust v HMRC [2019] UKUT 170, the UT has found that the effect of the VAT (Treatment of Transactions) Order 1992/630 (the de-supply order), was that a trust, which provided leased cars to employees, was not carrying on an economic activity. Read more.