VAT Analysis

Articles written by our expert VAT Consultants on the latest VAT issues.


ECJ rules in BFI case relating to cultural activities

The European Court of Justice (ECJ) has ruled in the case C-592/15 British Film Institute (BFI) that the provisions related to exemption for cultural activities mentioned in the old Sixth VAT Directive and the new EU VAT Directive 206/112/EC are not directly applicable and tax payers should follow the legislation as it is transposed in each EU Member State.

Background

BFI is a non-profit-making body established in order to promote and preserve cinema in the United Kingdom. BFI is partially financed via its activity of selling tickets for admission at theatres and film festivals located in the UK where it screens movies. From 1 January 1990 to 31 May 1996, it charged VAT at the standard UK rate for admission to movie screenings in various theatres and films festivals.

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UK | HMRC’s Call for Evidence on the Collection of VAT for Online Retailers

In the age of the digital economy there has been a large increase in online shopping in the UK in recent years.

Many of the goods sold to UK consumers are bought from overseas sellers using online marketplaces.

To cope with demand and ensure speedier deliveries, many of these overseas sellers are now storing their goods in UK warehouses, also known as fulfilment houses. Under existing VAT legislation, when the goods are in the UK at point of sale, this creates a liability for the overseas seller to register for and charge UK VAT on the sale. This is regardless of the level of sales, as a non-established seller doesn’t have entitlement to the VAT thresholds enjoyed by UK based sellers.

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VAT implications for Uber & the ‘gig economy’

Back in July 2016, Uber taxi drivers had a case heard in the London Central Employment Tribunal which concerned whether in the UK Uber drivers should be:

  1. Seen as employees of Uber; or
  2. deemed to be self-employed and hence working independently

The decision was handed down in October 2016 with the decision being that the drivers are employees of Uber.  This has important employment ramifications such as Uber drivers being entitled to worker’s rights including being paid the National Minimum Wage and receiving paid holiday.

However, a key point which has almost gone under the radar (but been brought into the spotlight recently by Jolyon Maughan) since the ruling was passed down is whether there are any other tax implications for Uber aside from those related to employment taxes.  These could occur because the outcome of the ruling is that the way Uber’s business is structured has, fundamentally, become subject to change.

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European Court of Justice (ECJ) rules tax authority cannot refuse intra-community exemption where the customer is not registered on VIES.

On the 9 February 2017, the CJEU ruled on the case C-21/16 Euro Tyre BV.

Background

Euro Tyre is a Portuguese branch of a Dutch Company, Euro Tyre BV. The dispute concerned multiple intra-community supplies made by Euro Tyre between 2010 and 2012 to a group company, Euro Tyre Distribución de Neumáticos (Spanish established company). At the time of those supplies Euro Tyre Distribución de Neumáticos was only registered as a taxable person for the purposes of VAT in Spain, it was not yet registered on the system of taxation on intra-community acquisitions or registered in the VAT Information Exchange System (the ‘VIES system’). In March 2013 the Spanish tax authorities granted Euro Tyre Distribución de Neumáticos the status of intra-community operator with retrospective effect from 1 July 2012 (Euro Tyre expected to have achieved retrospective effect to 2010).  Euro Tyre treated these supplies as being exempt with credit (the UK equivalent of zero rated).

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UK | VAT repayment claims by VAT groups

The UK operates VAT grouping rules which results in 2 or more entities having the same VAT number as long as certain conditions are met.

A VAT group is considered to be a single taxable person and therefore one member of the group is designated as the “representative member” for the group.

Recently, the Upper Tribunal ruled on a question which the Lower Tribunal had answered differently in two separate cases (Standard Chartered/Lloyds UKFTT 316 and MG Rover Group/BMW/Rover Company UKFTT 327).  The question concerned which member of the VAT group had the right to make claims for repayments of VAT (i.e. where VAT might not have been recovered at the right time and hence a claim was subsequently made for it).  The Upper Tribunal heard the cases together because the Lower Tribunal had answered in Standard Chartered/Lloyds that the representative member had the right.  However, in MG Rover Group/BMW/Rover it was held that the VAT group company which was involved in the transaction in question could make the claim.

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Industry Today – VAT implications of overseas projects for architects

Many UK architect firms are in demand throughout the EU, but many are not aware of how engaging in work overseas will have implications for their VAT obligations.

Rob Janering, Associate Director at Accordance, has written an article featured in Industry Today, about what VAT considerations must be taken into account when taking on a project in another country, as there may be a need for that architect firm to become VAT registered immediately.

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Location, location, location – Accordance writes for Business Matters

Rob Janering, Senior VAT Consultant at Accordance, has written for Business Matters this month, about the implications of how and where your business holds stock.

Accordance has recently seen an increase in E-Commerce businesses moving away from the traditional ‘Distance Selling’ business model towards a warehousing model, to enable them to offer faster, or even next day delivery options.

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Change for flash title supply chains?

The European Court of Justice (ECJ) has published its judgement in the case of Fast Bunkering Klaipeda (FBK – C-526/13).

The ECJ has surprisingly followed the Advocate General’s (AG) opinion which means the outcome might have considerable VAT implications for businesses in the marine fuel industry and beyond.

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EU Study on the application of Low Value Consignment Relief

The European Commission (“EC”) recently published its study on the application and impact of the VAT exemption for importation of small consignments.

This is the regime more commonly referred to as Low Value Consignment Relief (“LVCR”).

The study was commissioned by the EC because LVCR has now been in place for over 30 years and the commercial landscape has significantly changed since its introduction.  We have reviewed the study in order to share the main points it has raised.

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