VAT update - November 2019

In this month’s update we report on (1) the revocation of the Cross-border Trade (Public Notices) (EU Exit) Regulations; (2) the new VAT group provisions; and (3) the digitisation of the tribunal service. We also comment on three recent cases which consider (1) who the recipient of a supply is in circumstances where there is more than one potential recipient; (2) single purpose vouchers and the time of supply; and (3) inaccuracy penalties in the absence of any supply.

News items

HMRC announces revocation of Cross-border Trade (Public Notices) (EU Exit) Regulations 2019

The Cross-Border Trade (Public Notices) (EU Exit) Regulations 2019 (the Regulations) were laid before Parliament on 7 October 2019. The Regulations were intended to ease the flow of trade and provide flexibility. However, following opposition, HMRC has now confirmed the Regulations will be revoked. Read more

New VAT group provisions now in force
On 1 November 2019, the VAT grouping provisions contained in Schedule 18, Finance Act 2019, came into force and non-corporate entities can now join a VAT group if they meet certain conditions. Read more

Tribunal proceedings to be digitally recorded
In his 2019 annual report, Sir Ernest Ryder, Senior President of Tribunals, has commented that by 2020 the intention is to digitally record the proceedings of all reserved tribunals in the United Kingdom. This is part of a broader digitisation programme which the government is in the process of implementing. Read more

Cases

American Express Services Europe – economic reality and identifying the recipient of a supply

In American Express Services Europe Ltd v HMRC [2019] UKFTT 548, the First-tier Tribunal (FTT) has held that the taxpayer was making exempt supplies of services to a company located outside the EU and therefore could recover VAT. Read more

Lunar Missions – single purpose vouchers and time of supply

In Lunar Missions Ltd v HMRC [2019] UKUT 298 (TCC), the Upper Tribunal (UT) has held that a company which had offered rewards in the form of “single purpose vouchers”, within the meaning of paragraph 7A, Schedule 10A, Value Added Tax Act 1994, to supporters of its crowd-funded project had made a taxable supply for VAT purposes when the vouchers were issued. Read more

Donnelly – no inaccuracy penalty if input VAT claimed for non-existent supplies

In Laurence Donnelly v HMRC [2019] UKFTT 655 (TC), the FTT has held that no inaccuracy penalties were due for over-claimed input VAT as there had been no supply and therefore the over-declaration of output VAT meant that the potential lost revenue was nil.  Read more