VAT update September 2018

In this month’s update we report on the ECON committee’s amendments to the European Commission’s proposal for simplification of VAT for SMEs, the government’s technical note on the impact on VAT in the event of a no-deal Brexit; and Revenue and Customs Brief 6 (2018) on VAT exemption for all domestic service charges.

News

ECON committee amends Commission’s proposal for simplification of VAT for SMEs

The EU Parliament’s economic and monetary affairs (ECON) committee has provided amendments to the Commission’s proposal for simplification of VAT for SMEs in the EU, which forms part of the wider set of reforms moving towards the creation of a single EU VAT area.

Government publishes technical note on the impact on VAT of a no-deal Brexit

On 23 August 2018, the government published a note for businesses and individuals addressing the impact on VAT in the event of a no-deal Brexit. Although the government aims to retain existing VAT rules and procedures as much as possible, there will be some inevitable changes.

Revenue and Customs Brief 6 (2018): VAT exemption for all domestic service charges

On 7 September 2018, HMRC published Revenue and Customs Brief 6 (2018), which explains when Extra Statutory Concession 3.18 VAT exemption for all domestic service charges will be applied.

Cases

Done Brothers – supplies through fixed odds betting terminals exempt from VAT

 In Done Brothers (Cash Betting) Ltd v HMRC [2018] UKFTT 406 (TC), the First-tier Tribunal (FTT) has held that supplies made through fixed odds betting terminals (FOBT) are exempt from VAT. The FTT considered that treating similar supplies of gambling through FOBT differently for VAT purposes to supplies of comparator games such as casino roulette, electronic roulette, online gaming and over the counter bets on virtual games, breached the principle of fiscal neutrality.

SiBCAS – supply of temporary school accommodation not VAT exempt

In SiBCAS Ltd v HMRC [2018] CSIH 9 XA81/17, the Court of Session has held that the provision of temporary school accommodation is subject to VAT. In considering the contract of supply, the Court of Session concluded that the transaction of erecting, letting and dismantling temporary classrooms at a school was an entrepreneurial activity and did not constitute the passive letting of immovable property within the VAT exemption.

K D Media Publishing – No set-off of credit for overpaid VAT against VAT already paid in periods before discovery of overpayment

 In K D Media Publishing Ltd v HMRC [2018] UKFTT 0494 (TC), the First-tier Tribunal (FTT) has held that a taxpayer who was entitled, under section 80, VATA, to a credit for overpaid VAT, was unable to offset that credit against payments of VAT following the overpayment but before the discovery of the overpayment.