VAT update March 2019

In this month’s update we report on (1) HMRC’s updated guidance on claiming exemption from Making Tax Digital for VAT; (2) the latest edition of HMRC’s impact assessment for the movement of goods if the UK leaves the EU without a deal; and (3) HMRC’s policy change on VAT treatment of personal contract purchases.

We also comment on three recent cases relating to (1) the recovery of input tax on legal fees incurred by a company in defending proceedings brought against its director; (2) when a new point can be argued on appeal; and (3) whether goods were ordinarily incorporated into eco-build homes and qualified for a refund of VAT under the DIY house-builders scheme.

News items

Updated guidance on claiming exemption from Making Tax Digital for VAT

On 5 March 2019, HMRC updated VAT Notice 700/22, which sets out the rules for Making Tax Digital (MTD) for VAT, to include a new section concerning exemptions. Read more.

HMRC impact assessment for the movement of goods if the UK leaves the EU without a deal

On 25 February 2019, HMRC published the second edition of its impact assessment for the movement of goods if the UK leaves the UK without a deal. The paper provides an overview and more detailed considerations of the impact of the UK leaving the EU without a deal. Read more.

HMRC policy change on VAT treatment of personal contract purchases

On 27 February 2019, HMRC published Brief 1 (2019) which explains when it will treat personal contract purchases and similar contracts (PCP) as single supplies of taxable leasing services for VAT purposes following the Court of Justice of the European Union’s (CJEU) decision in Mercedes Benz Financial Services (C-164/16) (MBFS). Read more.

Cases

Praesto Consulting – VAT input tax recoverable on legal fees incurred by company in defending proceedings brought against its director

In Praesto Consulting UK Ltd v HMRC [2019] EWCA Civ 353, the Court of Appeal has held that a company was entitled to recover input tax on legal fees it incurred in defending civil proceedings brought against its director. Read more.

Eynsham Cricket Club – arguing a new point on appeal

In Eynsham Cricket Club v HMRC [2019] UKUT 47, the UT decided to remake the FTT’s decision so that the parties could argue a point before it which had not been argued before the FTT. Read more. 

Cosham – eco-build homes are a distinct category of building when determining VAT

In David Cosham v HMRC [2019] UKFTT 0119 (TC), the FTT has held that, for the purposes of determining if VAT was refundable under the DIY housebuilders scheme, eco-build houses were a separate category of building. Read more.