VAT update September 2019

In this month’s update we report on (1) changes to the reduced rate for energy-saving materials; (2) the VAT rule changes for higher education; and (3) new regulations amending the rules on when VAT adjustments may be made following a change to the price of goods and services. We also comment on three recent cases relating to (1) the refusal of a claim for the repayment of under-recovered input VAT;
(2) the repayment of input VAT charged on the acquisition of single farm payment entitlement units; and
(3) a notice of security issued with no explanation for the demand.

News items

Changes to the reduced rate for energy-saving materials

HMRC has published a policy paper entitled “VAT changes to the reduced rate for energy-saving materials”, together with a summary of responses to its consultation document published in April 2019. Read more

VAT rule changes for higher education

HMRC has published Revenue and Customs Brief 5 (2019), which provides an update on Revenue and Customs Brief 11 (2018) and sets out the VAT rule changes for higher education and VAT rules for education providers, which came into effect on 1 August 2019. Read more

New regulations amending the rules on when VAT adjustments may be made following a change to the price of goods and services

Regulation 38 of the VAT Regulations 1995 (the Regulations), has been amended to put it beyond doubt that reductions in the amount of VAT paid to HMRC can only be made when a refund is given to customers. The revised rules also clarify when and how VAT adjustments must be made. Read more

Cases

Phoenix Life Holdings – High Court quashes “outrageous” HMRC decision to deny claim for repayment of under-recovered input VAT

R (oao Phoenix Life Holdings Ltd and others) v HMRC [2019] EWHC 2043 (Admin), the High Court has quashed HMRC’s decision to refuse a claim for repayment of under-recovered input VAT. Read more

Smart & Son – Supreme Court confirms VAT incurred on funds raised for business purpose was recoverable

In HMRC v Frank A Smart & Son Ltd [2019] UKSC 39, the Supreme Court has held that a farming company was entitled to repayment of input VAT charged on its acquisition of single farm payment entitlement units which were related to its overall economic activities and future taxable supplies. Read more

Pachangas Mexican Restaurant – Tribunal allows appeal against notice of security as no reasons for the notice given

In Pachangas Mexican Restaurant Ltd v HMRC [2019] UKFTT 436 (TC), the First-tier Tribunal (FTT) allowed the taxpayer’s appeal against a demand for security as HMRC had failed to communicate the reasons behind its decision to demand security. Read more