V@ update - November 2020

Welcome to the November 2020 edition of RPC's V@, an update on developments in the VAT world that may impact your business.

News

• The Cabinet Office has updated its policy paper The Border Operating Model, which explains how the border with the EU will work after the Brexit transition period. The policy paper contains guidance on VAT on imported goods and import VAT.
• HMRC has published policy paper Revenue and Customs Brief 16 (2020): VAT liability of payroll services, which explains HMRC’s position following the decision by the Cheshire Centre for Independent Living to concede its appeal in the Upper Tribunal (UT). We report on this case below.
• HMRC has published policy paper Accounting for VAT on goods moving between Great Britain and Northern Ireland from 1 January 2021, which provides information concerning when UK VAT-registered businesses can, or need to, account for VAT on their tax return.
• HMRC has published policy paper Revenue and Customs Brief 17 (2020): VAT liability of private sonography services - First-tier Tribunal Decision, which clarifies HMRC’s policy concerning the VAT treatment of ultrasound scanning services following the decision of the First-tier Tribunal (FTT) in Window to the Womb (Franchise Ltd) and others v HMRC.
• HMRC has updated its guidance Changes to notifying an option to tax land and buildings during coronavirus (COVID-19). The guidance extends the time limit to notify HMRC of a decision to opt to tax land and buildings, from 30 days to 90 days, from the date the decision to opt was made. The updated guidance extends the application of the extension, so that it now applies to decisions made until 31 March 2021.
• HMRC has written a letter to VAT-registered businesses about new trade arrangements with the EU from 1 January 2021. The letter explains the steps such businesses need to take to continue trading with Europe from 1 January 2021.

Case reports

SK Telecom - Advocate General opines that roaming services provided to customers staying temporarily in a member state are the subject of 'effective use' in that member state

In SK Telecom Co Ltd v Finanzamt Graz-Stadt (Case C-593/19), the Court of Justice of the European Union (CJEU) was asked to provide a preliminary ruling on the interpretation of point (b) of the first paragraph of Article 59a of Council Directive 2006/112/EC (the Directive). Read more

Crow Metals - HMRC fails to  establish that a taxpayer should have known that its transactions were connected with the fraudulent evasion of VAT

In Crow Metals Ltd v HMRC [2020] UKFTT 423 (TC), the FTT allowed an appeal by Crow Metals Ltd (Crow), a scrap metal trader in Essex, against HMRC's decisions to deny input tax in respect of supplies of scrap metal. HMRC failed to satisfy the burden of proof to establish that Crow should have known that its transactions were connected with the fraudulent evasion of VAT. Read more

Cheshire Centre - HMRC ordered to pay taxpayer's costs due to its unreasonable behaviour

In HMRC v Cheshire Centre for Independent Living [2020] UKUT 275 (TCC), the UT ordered HMRC to pay the taxpayer's costs even though HMRC had been successful, as it had acted unreasonably in introducing a new ground of appeal. Read more