VAT update March 2018

In this month’s update we report on HMRC’s informal VAT grouping consultation; HMRC’s update on its project to digitise the VAT Retail Export Scheme and HMRC’s new guidance for Fast Parcel Operators.

We also comment on three recent cases involving the validity of penalty notices; the recovery of input tax on intra-community transactions; and the validity of the builder’s block concerning VAT recovery on goods incorporated into new buildings.

News

HMRC launches informal VAT grouping consultation
HMRC is currently undertaking an informal consultation with a number of industry bodies and trade associations in relation to three specific options for extending VAT grouping to certain non‑corporate entities. This follows a previous consultation on the UK’s VAT grouping rules launched in December 2016, from which the Government concluded that further work was required.  

Update note on the digitisation of the VAT Retail Export Scheme
HMRC recently published an update on its project to digitise the VAT Retail Export Scheme (RES), which is intended to improve efficiency for both retailers and travellers, and also help reduce fraud.

New guidance for Fast Parcel Operators reclaiming import VAT on returned goods
On 20 February 2018, HMRC issued updated guidance for Fast Parcel Operators (FPOs).

Cases

NT ADA Ltd – failure to offer a review did not invalidate VAT penalty
In HMRC v NT ADA Ltd [2018] UKUT 59, the Upper Tribunal (UT) has found that a penalty notice issued under section 67, Value Added Tax Act 1994 (VATA) could be valid even though it failed to refer to the taxpayer’s entitlement to request a review under section 83A, VATA.

Kreuzmayr – recovery of input tax on intra-community transactions
In Kreuzmayr GmbH v Finanzamt Linz (Case C‑628/16), the Court of Justice of the European Union (CJEU) has found that the Austrian tax authority was entitled to deny input tax recovery when it emerged that VAT should not have been charged in the first place.

Taylor Wimpey – Upper Tribunal clarifies the application of the “builder’s block” scheme
In Taylor Wimpey Plc v HMRC [2018] UKUT 55, the UT has allowed, in part, the taxpayer’s appeal in relation to its claim to recover input VAT incurred on the provision of certain white goods, kitchen appliances and carpets installed in newly built houses.