VAT update October 2019

In this month’s update we report on (1) how businesses who have paid too much VAT, as a result of an error in the TOMS, can correct it; (2) delays to the introduction of the domestic VAT reverse charge on construction services; and (3) the OTS’s update on its VAT review.

We also comment on three recent cases relating to (1) whether a charity’s supply of educational services was for “remuneration”; (2) salary sacrifice arrangements and their effectiveness; and (3) whether an assessment was made to “best judgement”.

News items

HMRC publishes guidance to businesses making TOMS supplies who have paid too much VAT

On 6 September 2019, HMRC published Revenue and Customs Brief 9, in which it explains how businesses that have paid too much VAT from 1 March 2019, as a result of an error in the Tour Operators Margin Scheme (TOMS), can correct it. Read more

HMRC delays VAT reverse charge on construction services
On 5 September 2019, an order was made to defer the commencement date of the VAT reverse charge on construction services to 1 October 2020. Read more

OTS publishes update on its VAT report
On 1 October 2019, the Offce of Tax Simplification (OTS) published an update on its VAT review. The update outlines and evaluates responses by the government, HM Treasury and HMRC to the report it published in November 2017. Read more

Cases

Yeshivas Lubavitch Manchester – charity’s fees for nursery education not remuneration

In Yeshivas Lubavitch Manchester v HMRC [2019] UKFTT 0427 (TC), the First-tier Tribunal (FTT) has held that fees charged by a charity for the supply of nursery education were not remuneration and the charity was therefore entitled to VAT zero rating on construction services and building materials for an annexe because it did not use the annexe for business purposes. Read more

Pertemps – salary sacrifice scheme was not a business for VAT purposes

In HMRC v Pertemps Ltd [2019] UKUT 234 (TCC), the Upper Tribunal (UT) has provided guidance on salary sacrifice arrangements and their effectiveness. Read more

Homsub – VAT assessment not made to “best judgement” due to flawed methodology

In Homsub Limited v HMRC [2019] UKFTT 536 (TC), the FTT has clarified the relevant principles to be applied in determining whether an assessment has been made to “best judgement”, for the purposes of section 73(1), VATA. Read more