Case Alert HMRC v VWFS - Supreme Court
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This document summarizes a legal case involving Volkswagen Financial Services (VWFS) and Her Majesty's Revenue and Customs (HMRC) regarding the apportionment of value-added tax (VAT) on overhead costs between VWFS's taxable sales of vehicles and exempt sales of vehicle financing. The UK Supreme Court decided to refer the case to the European Court of Justice for a preliminary ruling on whether VWFS is entitled to reclaim a portion of its overhead VAT costs.
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Case alert VW Financial Services (UK) Ltd v HMRC
This document summarizes a court case between VW Financial Services (VWFS) and Her Majesty's Revenue and Customs (HMRC). The Court of Appeal ruled in favor of VWFS on two grounds. First, it found that VWFS was entitled to reclaim value-added tax (VAT) incurred on general overheads, as these overheads had a direct link to both the taxable sale of cars and exempt financing activities. Second, it agreed with VWFS's apportionment of claiming 50% of residual input VAT based on there being two supplies (car and financing) per transaction. The ruling was a major victory for VWFS and loss for HMRC.
Case Alert - VWFS - Advocate General's opinion
This document summarizes an Advocate General's opinion in a case between HMRC and Volkswagen Financial Services (UK) Ltd regarding VAT treatment of hire purchase agreements. The Advocate General opined that input VAT incurred by VWFS on overheads cannot be recovered as it relates to the exempt supply of credit. However, the UK's treatment of hire purchase transactions as two separate supplies is incorrect under EU law - they should be treated as a single taxable supply of a car with an incidental credit element. If the court agrees, it would entitle VWFS to recover all input VAT but require accounting for output tax on interest charged. The opinion creates uncertainty for finance industry VAT treatment going forward.
Indirect Tax Update 12/2015
1) HMRC has issued new guidance on employers recovering VAT on pension fund management costs. The guidance recognizes that due to the unique structure of UK pension schemes, employers can reclaim VAT if they meet certain conditions, such as directly paying the fund manager.
2) An advocate general opinion found that holding companies can fully recover VAT on costs related to acquiring subsidiaries and raising capital as long as the activities are directly linked to the company's overall economic activities.
3) A tribunal case confirmed that for VAT purposes, the value of a part exchange vehicle in a new car sale is the amount agreed between the dealer and customer, not any estimated market value.
ITU 01/2016
The document summarizes three indirect tax cases:
1) The Court of Justice ruled that airlines must pay VAT on fares retained from passengers who do not board flights ("no-shows"), as the fares are consideration for the transport contract and not a compensation payment.
2) The First-tier Tribunal ruled that motor dealers' demonstrator cars are not capital goods for VAT purposes, meaning the value of their sales must be included in partial exemption calculations, potentially reducing dealers' historic VAT refund claims.
3) The Upper Tribunal ruled that bingo operators do not owe bingo duty on fees charged for electronic bingo devices, as the fees are for device rental rather than participation in bingo games.
ITU 08/2017
The Supreme Court referred the VWFS case to the European Court of Justice to determine if VAT incurred on overheads can be apportioned between taxable and exempt supplies under EU law. The Advocate General issued opinions in two other cases. In the first case, the AG found that importers may be entitled to duty refunds going back three years if goods were later found faulty. In the second case, the AG disagreed with a previous opinion and found that banks and insurers could form cost sharing groups for VAT purposes.
Case alert ifx cof a
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Case Alert - IFX Investments Ltd
This document summarizes a court case regarding whether income from 'Spot the Ball' competitions is exempt from VAT tax in the UK. It discusses that IFX, which operates Spot the Ball competitions, argued the competitions were exempt as a 'game of chance'. HMRC disagreed, but the First-tier Tax Tribunal sided with IFX. The Upper Tribunal then reversed this decision, but the Court of Appeal has now restored the First-tier Tribunal's original ruling, deeming Spot the Ball a game of chance and its income exempt from VAT. HMRC may seek to appeal the ruling to the UK Supreme Court.
ITU 34/2016
The document summarizes three recent tax cases:
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2) An EU court advisor said Hungary cannot deny a taxpayer's VAT recovery after incorrectly applying the reverse charge mechanism, as that violates neutrality.
3) An EU court ruled that prize money for racehorses was not subject to VAT, and related training costs were deductible overhead, since the horses promoted the business. The training services themselves were taxed at the standard rate.
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This document summarizes a court case between VW Financial Services (VWFS) and Her Majesty's Revenue and Customs (HMRC). The Court of Appeal ruled in favor of VWFS on two grounds. First, it found that VWFS was entitled to reclaim value-added tax (VAT) incurred on general overheads, as these overheads had a direct link to both the taxable sale of cars and exempt financing activities. Second, it agreed with VWFS's apportionment of claiming 50% of residual input VAT based on there being two supplies (car and financing) per transaction. The ruling was a major victory for VWFS and loss for HMRC.
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This document summarizes an Advocate General's opinion in a case between HMRC and Volkswagen Financial Services (UK) Ltd regarding VAT treatment of hire purchase agreements. The Advocate General opined that input VAT incurred by VWFS on overheads cannot be recovered as it relates to the exempt supply of credit. However, the UK's treatment of hire purchase transactions as two separate supplies is incorrect under EU law - they should be treated as a single taxable supply of a car with an incidental credit element. If the court agrees, it would entitle VWFS to recover all input VAT but require accounting for output tax on interest charged. The opinion creates uncertainty for finance industry VAT treatment going forward.
Indirect Tax Update 12/2015
1) HMRC has issued new guidance on employers recovering VAT on pension fund management costs. The guidance recognizes that due to the unique structure of UK pension schemes, employers can reclaim VAT if they meet certain conditions, such as directly paying the fund manager.
2) An advocate general opinion found that holding companies can fully recover VAT on costs related to acquiring subsidiaries and raising capital as long as the activities are directly linked to the company's overall economic activities.
3) A tribunal case confirmed that for VAT purposes, the value of a part exchange vehicle in a new car sale is the amount agreed between the dealer and customer, not any estimated market value.
ITU 01/2016
The document summarizes three indirect tax cases:
1) The Court of Justice ruled that airlines must pay VAT on fares retained from passengers who do not board flights ("no-shows"), as the fares are consideration for the transport contract and not a compensation payment.
2) The First-tier Tribunal ruled that motor dealers' demonstrator cars are not capital goods for VAT purposes, meaning the value of their sales must be included in partial exemption calculations, potentially reducing dealers' historic VAT refund claims.
3) The Upper Tribunal ruled that bingo operators do not owe bingo duty on fees charged for electronic bingo devices, as the fees are for device rental rather than participation in bingo games.
ITU 08/2017
The Supreme Court referred the VWFS case to the European Court of Justice to determine if VAT incurred on overheads can be apportioned between taxable and exempt supplies under EU law. The Advocate General issued opinions in two other cases. In the first case, the AG found that importers may be entitled to duty refunds going back three years if goods were later found faulty. In the second case, the AG disagreed with a previous opinion and found that banks and insurers could form cost sharing groups for VAT purposes.
Case alert ifx cof a
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Case Alert - IFX Investments Ltd
This document summarizes a court case regarding whether income from 'Spot the Ball' competitions is exempt from VAT tax in the UK. It discusses that IFX, which operates Spot the Ball competitions, argued the competitions were exempt as a 'game of chance'. HMRC disagreed, but the First-tier Tax Tribunal sided with IFX. The Upper Tribunal then reversed this decision, but the Court of Appeal has now restored the First-tier Tribunal's original ruling, deeming Spot the Ball a game of chance and its income exempt from VAT. HMRC may seek to appeal the ruling to the UK Supreme Court.
ITU 34/2016
The document summarizes three recent tax cases:
1) A UK tribunal ruled that a company conducting a management buyout could reclaim VAT on professional fees, as it was part of a VAT group whose overall activities were taxable. This prevents HMRC from isolating an entity within a VAT group.
2) An EU court advisor said Hungary cannot deny a taxpayer's VAT recovery after incorrectly applying the reverse charge mechanism, as that violates neutrality.
3) An EU court ruled that prize money for racehorses was not subject to VAT, and related training costs were deductible overhead, since the horses promoted the business. The training services themselves were taxed at the standard rate.
ITU 32/2015
The UK Court of Appeal referred the long-running Mercedes-Benz Financial Services VAT case to the Court of Justice of the European Union to determine the meaning of "in the normal course of events" regarding whether a supply is of goods or services. A decision is not expected for several years. Additionally, the CJEU clarified import classification for temperature indicators, and the UK Tax Tribunal upheld two HMRC demands for security payments as conditions for taxpayers to continue trading, finding HMRC acted reasonably given the companies' histories.
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This document summarizes a court case regarding whether local authorities providing off-street car parking should be subject to VAT. The Court of Appeal dismissed the appeal from several Councils and found that exempting local authorities from VAT on car parking activities would distort competition with commercial car parking providers that do pay VAT. The Court agreed with earlier rulings from the First-tier Tax Tribunal and Upper Tribunal that if local authorities did not charge VAT, they could lower prices and impact the profits and prices of commercial competitors operating in the same market.
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This document summarizes three key topics:
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2) It discusses a tax tribunal case regarding the supply of mobile homes where the tribunal found separate contracts for the home and land, treating the land license as an exempt supply.
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Dear Readers,
We are pleased to present TransPrice Times for the second fortnight of June 2016.
This issue contains diversity of case rulings ranging from issues on royalty / FTS to management service fees and TDS rates on payments made to a non-resident.
CBDT has been on a notification spree where in last 2 days, it has notified the foreign tax credit rules and the much awaited 'indirect transfer' rules which will be taken up extensively in the next bulletin along with the recent amendment on General anti-avoidance rules (GAAR).
We hope you find this newsletter both timely and useful, and we look forward to your feedback and suggestions to improve it further. You can write to us at akshaykenkre@transprice.in
Happy Reading and a very happy CA day (1 July 2016)!!!
ITU 20/2016
1) The Upper Tribunal ruled that the transfer of a business into a VAT group can qualify as a transfer of a going concern (TOGC), meaning no VAT is due. This contradicted HMRC's previous policy.
2) HMRC has now reversed its policy in line with the Upper Tribunal's ruling, stating in Revenue & Customs Brief 11/2016 that transfers into and out of a VAT group can be TOGCs if certain conditions are met.
3) A First-tier Tax Tribunal case involved a company that paid VAT on wind turbines from a supplier that went into administration before delivering the goods. The tribunal ruled the company could not reclaim the VAT since the turbines were not supplied.
Indirect Tax Update 40/2014
The Upper Tribunal upheld the First-tier Tribunal's decision that the taxpayer failed to demonstrate that paying the disputed tax would cause hardship. As a result, the taxpayer must either pay the tax or withdraw its appeal. This case concerned VAT payments on mobile phones in 2006. HMRC claimed the phone model was not actually available then and assessed the taxpayer to recover the VAT. After years of litigation over hardship appeal rights, the Upper Tribunal dismissed all of the taxpayer's arguments, agreeing with the First-tier Tribunal's original decision. The taxpayer may now either pay the tax or withdraw its appeal.
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This weeks ITU looks at the VAT rules changes for advertising. The basic VAT place of supply rules – the rules that determine where a supply of goods or services takes place – sometimes lead to an outcome which results in supplies not being taxed at all. As an example, the place of supply of advertising services is currently where the customer belongs. If this is not within the EU, then no EU VAT is charged by an EU supplier even though the advertisement in question may be targeted at EU consumers.
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Case Alert - Birmingham Hippodrome Theatre Trust
The Court of Appeal unanimously dismissed an appeal from Birmingham Hippodrome Theatre Trust regarding HMRC's right to offset previously claimed input tax against a claim for overpaid output tax. While the theatre had incorrectly accounted for and paid output tax on box office receipts, it had also claimed input tax on refurbishment works. The Court confirmed that under section 81(3A) of the VAT Act, HMRC is entitled to offset the input tax claimed in error to prevent unjust enrichment, effectively putting the Trust back in the position it would have been had VAT been implemented correctly. The Court also found that the offsetting did not infringe EU law principles and the Trust's only remaining appeal option is the Supreme Court.
TransPrice Times 15th to 30th September 2015
Dear Readers,
We are delighted to present second fortnight edition of TransPrice Times for the month of September 2015.
This newsletter gives a snapshot on significant transfer pricing case laws pronounced in relation to issues like marketing intangible, consistency rule and corporate guarantees along with updates on recent happenings in India.
We hope you find it useful and look forward to your feedback.You can write to me at akshaykenkre@transprice.in
Happy reading !!!
Indirect Tax Update 21/2014
The Court of Appeal ruled that HMRC has the power to offset a previous overclaim of input tax against an overpayment of output tax, even if the normal time limits would bar it. The case involved Birmingham Hippodrome Theatre, which had incorrectly accounted for and paid output tax on exempt box office receipts between 2000-2001. It also claimed input tax on refurbishment works. The Court ruled that HMRC could offset the input tax claimed in error against the theatre's claim for repayment of overpaid output tax, as both errors stemmed from the same original mistake regarding the VAT treatment of box office receipts. This outcome prevents unjust enrichment of the theatre by putting it in the position it would have been in had VAT
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ITU 23/2016
The Scottish Court of Session ruled that within a VAT group, only the representative member is entitled to claim VAT refunds, not the individual members. The Upper Tribunal dismissed an appeal regarding apportionment of input VAT between taxable and non-taxable activities. The Court of Justice ruled that "screenplays" should be classified as video producing apparatus for customs duty purposes based on their objective characteristics.
ITU 10/2016
The document summarizes two key developments from the past week:
1) A Court of Justice ruling found that claims handling services provided to an insurer are not exempt from VAT as insurance transactions or related services. UK law will need to change and businesses providing these services should review their VAT position.
2) The UK budget announced new powers for HMRC to make online marketplaces jointly liable for VAT debts of overseas sellers on their platforms. This aims to reduce the estimated £365 million annual VAT loss from non-compliant foreign traders. Online portals will need to strengthen due diligence of sellers.
Case alert - Heating and Plumbing Supplies Ltd
The document summarizes a tax tribunal case regarding a company that incurred professional fees during a management buyout. The tribunal ruled that as the buyout company and target formed a VAT group, they must be treated as a single taxable entity rather than in isolation. As the VAT group only made taxable supplies, it was entitled to reclaim all input VAT on the professional fees, even though the buyout company alone had no economic activity. The tribunal dismissed the tax authority's view that input VAT recovery should be denied if not claimable by the buyout company separately.
TransPrice Times 1st - 15th March 2017
Dear Members,
We are pleased to present TransPrice Times for the first fortnight of March 2017.
This periodical covers important rulings addressing key transfer pricing issues related to profit level indicators, basket approach for benchmarking practices, foreign exchange gains, etc. Further, a detailed analysis of the recently notified norms by RBI, for FDI in Limited Liability Partnerships has been provided.
We would be happy to know your suggestions. You can write to us at akshaykenkre@transprice.in or at https://www.transprice.in/ask-query.html
Thank You and Happy Reading!!
Indirect Tax Update 18/2015
The Supreme Court ruled that a VAT avoidance scheme used by car retailer Pendragon was an abuse of EU law. Under the scheme, Pendragon claimed to sell used cars under the margin scheme even though it had deducted input VAT on the original purchases. The Supreme Court found this violated the purpose of the VAT Directive by giving Pendragon an illegitimate tax advantage. Additionally, two First-tier Tribunal cases were summarized: one ruled motor homes could not be treated as zero-rated caravans for VAT purposes due to their ability to move under own power. The other found the transfer of an opted property did not qualify as a transfer of a business due to the purchaser failing to properly opt to tax.
ITU 35/2015
This document summarizes three indirect tax cases:
1) The Court of Appeal ruled in favor of HMRC in a long-running case about whether VAT applied to off-street car parking provided by local authorities.
2) The Court of Appeal dismissed an appeal by Leeds City Council seeking refunds of VAT paid between 1996 and 2006, finding the three-year limitation period was valid.
3) The First-Tier Tax Tribunal dismissed an appeal by National Car Parks seeking a refund of VAT paid on voluntary overpayments made at parking machines, determining the overpayments constituted consideration for parking.
Indirect Tax Update 30/2015
HMRC has issued two Revenue & Customs Briefs on recent indirect tax issues:
1. Brief 18/2015 provides guidance on VAT treatment of supplies between establishments in different EU countries in light of the Skandia case. Supplies between a UK entity and an establishment in an EU country with Swedish-style VAT groups will be subject to the reverse charge in the UK or EU country.
2. Brief 19/2015 announces that HMRC will make partial VAT refunds to qualifying golf clubs that overpaid VAT on green fees, refunding 33-50% of valid claims depending on green fee prices. This is an interim measure pending the outcome of ongoing litigation.
3. The Upper Tribunal ruled
Case Alert - Mercedes-Benz Financial Services UK Ltd
1) Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd, which provides assurance, tax, and advisory services through independent member firms around the world.
2) The Court of Justice of the European Union ruled that a car leasing contract with a substantial balloon payment option to purchase constitutes a supply of services, not goods, for VAT purposes.
3) This ruling confirms that such leasing arrangements will be treated as the supply of services for VAT, with tax owed on each installment payment rather than up front on the full price.
ITU 34/2015
This document summarizes three separate cases related to VAT (Value Added Tax) law in the UK:
1) The Upper Tribunal ruled in the case of HMRC v Associated Newspapers that a newspaper publisher could claim VAT paid on vouchers purchased from intermediaries as input tax, but not those from retailers. There was no output tax due as the vouchers were provided for business purposes as part of a promotion scheme.
2) HMRC issued new guidance following the Credit Lyonnais case, excluding supplies made by overseas branches from partial exemption calculations starting January 2016. This may require some businesses to amend their partial exemption methods.
3) The Court of Justice ruled that investment funds investing in real estate can qualify as
ITU 06/2018
The document provides summaries of three recent court rulings related to indirect tax:
1) The Advocate General issued an opinion in Volkswagen Financial Services v HMRC, finding that vehicle financing arrangements constitute a single taxable supply of a vehicle, entitling the company to full VAT recovery on overheads. This contradicts the UK's view of separate taxable and exempt supplies.
2) The Court of Appeal ruled against Wakefield College in its claim that education provided to students paying partial fees due to financial hardship was not an "economic activity" subject to VAT, as the partial fees constitute remuneration rather than consideration.
3) The Upper Tribunal dismissed HMRC's argument that payments by Marriott
ITU 06/2018
The document provides summaries of three recent court rulings related to indirect tax:
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2) The Court of Appeal ruled against Wakefield College in its claim that education provided to students paying partial fees was not an economic activity for VAT purposes, as the partial fees constitute consideration.
3) The Upper Tribunal dismissed HMRC's argument that payments by Marriott Rewards to redeeming hotels were third party consideration, but also ruled that neither Marriott nor Whitbread established the UK or US
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The UK Court of Appeal referred the long-running Mercedes-Benz Financial Services VAT case to the Court of Justice of the European Union to determine the meaning of "in the normal course of events" regarding whether a supply is of goods or services. A decision is not expected for several years. Additionally, the CJEU clarified import classification for temperature indicators, and the UK Tax Tribunal upheld two HMRC demands for security payments as conditions for taxpayers to continue trading, finding HMRC acted reasonably given the companies' histories.
Case alert Isle of Wight - Court of Appeal
This document summarizes a court case regarding whether local authorities providing off-street car parking should be subject to VAT. The Court of Appeal dismissed the appeal from several Councils and found that exempting local authorities from VAT on car parking activities would distort competition with commercial car parking providers that do pay VAT. The Court agreed with earlier rulings from the First-tier Tax Tribunal and Upper Tribunal that if local authorities did not charge VAT, they could lower prices and impact the profits and prices of commercial competitors operating in the same market.
ITU 06/2016
This document summarizes three key topics:
1) It reminds businesses importing goods into the EU that the new Union Customs Code will take effect on May 1, 2016, bringing major changes including new requirements for financial guarantees and adopting a "last sale" value for import declarations.
2) It discusses a tax tribunal case regarding the supply of mobile homes where the tribunal found separate contracts for the home and land, treating the land license as an exempt supply.
3) It notes a rare case where a business successfully argued a reasonable excuse for default surcharges due to a lender not providing funds on time for a VAT payment.
TransPrice Times 16th - 30th June 2016
Dear Readers,
We are pleased to present TransPrice Times for the second fortnight of June 2016.
This issue contains diversity of case rulings ranging from issues on royalty / FTS to management service fees and TDS rates on payments made to a non-resident.
CBDT has been on a notification spree where in last 2 days, it has notified the foreign tax credit rules and the much awaited 'indirect transfer' rules which will be taken up extensively in the next bulletin along with the recent amendment on General anti-avoidance rules (GAAR).
We hope you find this newsletter both timely and useful, and we look forward to your feedback and suggestions to improve it further. You can write to us at akshaykenkre@transprice.in
Happy Reading and a very happy CA day (1 July 2016)!!!
ITU 20/2016
1) The Upper Tribunal ruled that the transfer of a business into a VAT group can qualify as a transfer of a going concern (TOGC), meaning no VAT is due. This contradicted HMRC's previous policy.
2) HMRC has now reversed its policy in line with the Upper Tribunal's ruling, stating in Revenue & Customs Brief 11/2016 that transfers into and out of a VAT group can be TOGCs if certain conditions are met.
3) A First-tier Tax Tribunal case involved a company that paid VAT on wind turbines from a supplier that went into administration before delivering the goods. The tribunal ruled the company could not reclaim the VAT since the turbines were not supplied.
Indirect Tax Update 40/2014
The Upper Tribunal upheld the First-tier Tribunal's decision that the taxpayer failed to demonstrate that paying the disputed tax would cause hardship. As a result, the taxpayer must either pay the tax or withdraw its appeal. This case concerned VAT payments on mobile phones in 2006. HMRC claimed the phone model was not actually available then and assessed the taxpayer to recover the VAT. After years of litigation over hardship appeal rights, the Upper Tribunal dismissed all of the taxpayer's arguments, agreeing with the First-tier Tribunal's original decision. The taxpayer may now either pay the tax or withdraw its appeal.
Indirect Tax Update 10 May 2016
This weeks ITU looks at the VAT rules changes for advertising. The basic VAT place of supply rules – the rules that determine where a supply of goods or services takes place – sometimes lead to an outcome which results in supplies not being taxed at all. As an example, the place of supply of advertising services is currently where the customer belongs. If this is not within the EU, then no EU VAT is charged by an EU supplier even though the advertisement in question may be targeted at EU consumers.
HMRC has begun a consultation process which may lead to the imposition of a 'use and enjoyment' rule which, it hopes, will ensure that, in such circumstances, the place of supply will be determined by reference to where the service is targeted and consumed rather than simply where the customer is established.
Case Alert - Birmingham Hippodrome Theatre Trust
The Court of Appeal unanimously dismissed an appeal from Birmingham Hippodrome Theatre Trust regarding HMRC's right to offset previously claimed input tax against a claim for overpaid output tax. While the theatre had incorrectly accounted for and paid output tax on box office receipts, it had also claimed input tax on refurbishment works. The Court confirmed that under section 81(3A) of the VAT Act, HMRC is entitled to offset the input tax claimed in error to prevent unjust enrichment, effectively putting the Trust back in the position it would have been had VAT been implemented correctly. The Court also found that the offsetting did not infringe EU law principles and the Trust's only remaining appeal option is the Supreme Court.
TransPrice Times 15th to 30th September 2015
Dear Readers,
We are delighted to present second fortnight edition of TransPrice Times for the month of September 2015.
This newsletter gives a snapshot on significant transfer pricing case laws pronounced in relation to issues like marketing intangible, consistency rule and corporate guarantees along with updates on recent happenings in India.
We hope you find it useful and look forward to your feedback.You can write to me at akshaykenkre@transprice.in
Happy reading !!!
Indirect Tax Update 21/2014
The Court of Appeal ruled that HMRC has the power to offset a previous overclaim of input tax against an overpayment of output tax, even if the normal time limits would bar it. The case involved Birmingham Hippodrome Theatre, which had incorrectly accounted for and paid output tax on exempt box office receipts between 2000-2001. It also claimed input tax on refurbishment works. The Court ruled that HMRC could offset the input tax claimed in error against the theatre's claim for repayment of overpaid output tax, as both errors stemmed from the same original mistake regarding the VAT treatment of box office receipts. This outcome prevents unjust enrichment of the theatre by putting it in the position it would have been in had VAT
Case alert Finmeccanica Global Services SpA - Court of Appeal
This document summarizes a court case regarding an Italian company, Finmeccanica Global Services SpA, that incurred costs in the UK and sought to reclaim VAT from the UK. The court ruled that Finmeccanica had made supplies in the UK by invoicing costs to other group companies for construction and operation of an enclosure at an air show. As making supplies in the country where VAT is claimed is not allowed, Finmeccanica was not entitled to the VAT refund. The court determined the essential service was making the air show event possible at that location and time, not advertising as Finmeccanica had argued.
ITU 23/2016
The Scottish Court of Session ruled that within a VAT group, only the representative member is entitled to claim VAT refunds, not the individual members. The Upper Tribunal dismissed an appeal regarding apportionment of input VAT between taxable and non-taxable activities. The Court of Justice ruled that "screenplays" should be classified as video producing apparatus for customs duty purposes based on their objective characteristics.
ITU 10/2016
The document summarizes two key developments from the past week:
1) A Court of Justice ruling found that claims handling services provided to an insurer are not exempt from VAT as insurance transactions or related services. UK law will need to change and businesses providing these services should review their VAT position.
2) The UK budget announced new powers for HMRC to make online marketplaces jointly liable for VAT debts of overseas sellers on their platforms. This aims to reduce the estimated £365 million annual VAT loss from non-compliant foreign traders. Online portals will need to strengthen due diligence of sellers.
Case alert - Heating and Plumbing Supplies Ltd
The document summarizes a tax tribunal case regarding a company that incurred professional fees during a management buyout. The tribunal ruled that as the buyout company and target formed a VAT group, they must be treated as a single taxable entity rather than in isolation. As the VAT group only made taxable supplies, it was entitled to reclaim all input VAT on the professional fees, even though the buyout company alone had no economic activity. The tribunal dismissed the tax authority's view that input VAT recovery should be denied if not claimable by the buyout company separately.
TransPrice Times 1st - 15th March 2017
Dear Members,
We are pleased to present TransPrice Times for the first fortnight of March 2017.
This periodical covers important rulings addressing key transfer pricing issues related to profit level indicators, basket approach for benchmarking practices, foreign exchange gains, etc. Further, a detailed analysis of the recently notified norms by RBI, for FDI in Limited Liability Partnerships has been provided.
We would be happy to know your suggestions. You can write to us at akshaykenkre@transprice.in or at https://www.transprice.in/ask-query.html
Thank You and Happy Reading!!
Indirect Tax Update 18/2015
The Supreme Court ruled that a VAT avoidance scheme used by car retailer Pendragon was an abuse of EU law. Under the scheme, Pendragon claimed to sell used cars under the margin scheme even though it had deducted input VAT on the original purchases. The Supreme Court found this violated the purpose of the VAT Directive by giving Pendragon an illegitimate tax advantage. Additionally, two First-tier Tribunal cases were summarized: one ruled motor homes could not be treated as zero-rated caravans for VAT purposes due to their ability to move under own power. The other found the transfer of an opted property did not qualify as a transfer of a business due to the purchaser failing to properly opt to tax.
ITU 35/2015
This document summarizes three indirect tax cases:
1) The Court of Appeal ruled in favor of HMRC in a long-running case about whether VAT applied to off-street car parking provided by local authorities.
2) The Court of Appeal dismissed an appeal by Leeds City Council seeking refunds of VAT paid between 1996 and 2006, finding the three-year limitation period was valid.
3) The First-Tier Tax Tribunal dismissed an appeal by National Car Parks seeking a refund of VAT paid on voluntary overpayments made at parking machines, determining the overpayments constituted consideration for parking.
Indirect Tax Update 30/2015
HMRC has issued two Revenue & Customs Briefs on recent indirect tax issues:
1. Brief 18/2015 provides guidance on VAT treatment of supplies between establishments in different EU countries in light of the Skandia case. Supplies between a UK entity and an establishment in an EU country with Swedish-style VAT groups will be subject to the reverse charge in the UK or EU country.
2. Brief 19/2015 announces that HMRC will make partial VAT refunds to qualifying golf clubs that overpaid VAT on green fees, refunding 33-50% of valid claims depending on green fee prices. This is an interim measure pending the outcome of ongoing litigation.
3. The Upper Tribunal ruled
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Case alert Finmeccanica Global Services SpA - Court of Appeal
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Similar to Case Alert HMRC v VWFS - Supreme Court
Case Alert - Mercedes-Benz Financial Services UK Ltd
1) Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd, which provides assurance, tax, and advisory services through independent member firms around the world.
2) The Court of Justice of the European Union ruled that a car leasing contract with a substantial balloon payment option to purchase constitutes a supply of services, not goods, for VAT purposes.
3) This ruling confirms that such leasing arrangements will be treated as the supply of services for VAT, with tax owed on each installment payment rather than up front on the full price.
ITU 34/2015
This document summarizes three separate cases related to VAT (Value Added Tax) law in the UK:
1) The Upper Tribunal ruled in the case of HMRC v Associated Newspapers that a newspaper publisher could claim VAT paid on vouchers purchased from intermediaries as input tax, but not those from retailers. There was no output tax due as the vouchers were provided for business purposes as part of a promotion scheme.
2) HMRC issued new guidance following the Credit Lyonnais case, excluding supplies made by overseas branches from partial exemption calculations starting January 2016. This may require some businesses to amend their partial exemption methods.
3) The Court of Justice ruled that investment funds investing in real estate can qualify as
ITU 06/2018
The document provides summaries of three recent court rulings related to indirect tax:
1) The Advocate General issued an opinion in Volkswagen Financial Services v HMRC, finding that vehicle financing arrangements constitute a single taxable supply of a vehicle, entitling the company to full VAT recovery on overheads. This contradicts the UK's view of separate taxable and exempt supplies.
2) The Court of Appeal ruled against Wakefield College in its claim that education provided to students paying partial fees due to financial hardship was not an "economic activity" subject to VAT, as the partial fees constitute remuneration rather than consideration.
3) The Upper Tribunal dismissed HMRC's argument that payments by Marriott
ITU 06/2018
The document provides summaries of three recent court rulings related to indirect tax:
1) The Advocate General issued an opinion in Volkswagen Financial Services v HMRC, finding that vehicle financing arrangements constitute a single taxable supply of a vehicle, allowing the company to recover input tax on overheads.
2) The Court of Appeal ruled against Wakefield College in its claim that education provided to students paying partial fees was not an economic activity for VAT purposes, as the partial fees constitute consideration.
3) The Upper Tribunal dismissed HMRC's argument that payments by Marriott Rewards to redeeming hotels were third party consideration, but also ruled that neither Marriott nor Whitbread established the UK or US
ITU 32/2016
The First-tier Tax Tribunal issued decisions in two cases. In Hotels4U.com v HMRC, the Tribunal followed the precedent from an earlier Supreme Court case and found that Hotels4U.com acted as an agent for hotels, not a principal, so was not subject to the UK Tour Operators' Margin Scheme for VAT. In Water Property Ltd, the Tribunal rejected HMRC's argument that an option to tax should be disapplied due to anti-avoidance rules, as there was no evidence of tax avoidance. The Tribunal also alerted importers that six countries will start using the new EU Registered Exporters scheme from January 2017, which could impact their ability to claim customs duty reductions if their
ITU 15/2016
The document discusses proposed changes to VAT rules for advertising services supplied between EU and non-EU businesses. Currently, advertising services supplied to a business outside the EU do not incur EU VAT. HMRC proposes to introduce a "use and enjoyment" rule so that VAT is determined by where the advertising is targeted and consumed, not just the customer's location. However, key terms are undefined and many questions remain around implementation, such as how to determine and verify use and enjoyment location. HMRC will consult further over the summer and aims to introduce draft legislation by late 2016.
ITU 31/2016
The Court of Justice ruled that Germany could not deny VAT exemption for the transfer of a vehicle from Germany to Spain by a taxpayer simply because the taxpayer failed to include a VAT number on the invoice, as long as the substantive requirements for exemption were met. The failure to comply with this formal requirement should not prevent exemption from being available, unless tax evasion was suspected. The German law preventing exemption due to missing a VAT number on the invoice violated the purpose of the VAT Directive.
Additionally, the Upper Tribunal affirmed that for VAT groups in the UK, the representative member of the group is entitled to receive any VAT refunds, even if another group member made the supplies and initially overpaid VAT. Individual group members cannot claim refund
Case Alert Associated Newspapers - Upper Tribunal
This document summarizes a recent Upper Tribunal judgment regarding the VAT treatment of vouchers given away by Associated Newspapers (AN) as part of a business promotion scheme. The Tribunal partially allowed HMRC's appeal regarding AN's entitlement to reclaim input VAT paid on voucher purchases. Specifically, AN could reclaim VAT paid to intermediaries but not on "retailer vouchers" issued by AN directly. The Tribunal also dismissed HMRC's appeal that AN must account for output tax when providing the vouchers to customers for free, as this satisfied the "business purpose test" of increasing newspaper/ad sales. The judgment clarifies VAT implications for businesses using vouchers in promotions.
Issue of marketing intangibles in India- Breath of Fresh Air
The document discusses a landmark Indian court ruling on the issue of transfer pricing adjustments made by tax authorities related to marketing intangibles. Specifically, the ruling addressed whether excessive advertising, marketing and promotional expenses incurred by Indian affiliates of multinational enterprises constituted an international transaction under Indian tax law. The court rejected arguments made by taxpayers and held that such expenses were international transactions. It also held that the transactional net margin method could be used to evaluate pricing when marketing and distribution functions are interrelated. The court provided clarity on several issues around marketing intangibles, but questions remain about applying its principles to licensed manufacturers.
ITU 17/2016
The Court of Justice ruled against Bookit Ltd and the National Exhibition Centre (NEC) in two cases involving VAT exemption on card handling and payment processing fees. The Court determined that the taxpayers' actions in processing card payments and exchanging payment information did not constitute a financial service under the VAT Directive since they did not directly debit or credit accounts. As a result, the fees were subject to VAT rather than exempt. This ruling went against the taxpayers' arguments and means they and other businesses must pay VAT on similar card handling income.
Vietnam – Taxation – 2015
The document summarizes tax issues in Vietnam discussed by the We Taxation and Transfer Pricing Sector Committee. It addresses five key areas: 1) VAT-related issues regarding VAT rates for export services and non-VAT clawbacks for failed oil and gas projects. 2) Restricted deductibility of advertising and promotional expenses. 3) Issues with tax treaty claims and treatment of capital transfers in real estate companies. 4) Foreign contractor withholding tax treatment related to warranties and distribution rights. 5) Simplifying documentation for foreign tax credits. Recommendations are provided for each area to improve tax regulations and create a more competitive investment environment.
ITU 28/2016
The Court of Justice of the European Union issued two judgments relating to input VAT deductions. In Senatex GmbH, the German tax authority disallowed a deduction because invoices lacked VAT identification numbers, but the CJEU ruled this violated the taxpayer's fundamental right of deduction. In Barlis 06, the Portuguese tax authority disallowed a deduction due to insufficient service descriptions on invoices, but the CJEU said failure to meet a formal condition should not preclude deduction if substantive conditions are met. Additionally, the Upper Tribunal preliminarily ruled that treating local authority waste collection as outside VAT scope did not violate neutrality principles since authorities provide such services under a special legal regime.
Lawyer in Vietnam Oliver Massmann Transfer Pricing in Mergers and Acquisitio...
The document discusses transfer pricing issues that arise in mergers and acquisitions (M&A) in Vietnam. Specifically, it notes that if the agreed transfer price in an acquisition is less than the book value of the seller's equity, the licensing authority may refuse to approve the acquisition. It also discusses unclear tax regulations regarding capital gains tax on offshore acquisitions. This lack of clarity creates uncertain financial obligations for investors and can impact deal timelines. The document recommends harmonizing interpretations of transfer pricing and clarifying regulatory frameworks on tax liabilities from M&A transactions in Vietnam.
ITU 05/2016
The document summarizes three VAT cases:
1) Norseman Gold Plc - The company could not reclaim input VAT because it was not making taxable supplies, as there was no consideration for its management services. Intention to pay in the future was not sufficient.
2) The Wellcome Trust - The trust spent money refurbishing a property but could not deduct all input VAT under the Lennartz mechanism because its investment management activities were not considered "private use" by the tribunal.
3) TGH (Construction) Ltd - The tribunal ruled a maintenance workshop qualified for zero-rating VAT even though it serviced other existing buildings, as it was intended for use together with a newly
Case alert Intelligent Managed Systems Ltd - upper tribunal
This document summarizes a case involving the transfer of a banking platform business from one company to another within a VAT group. The key points are:
1) HMRC did not view the transfer as a transfer of a going concern because the purchasing company only supplied services to other members of its VAT group, not external third parties.
2) However, the Upper Tribunal disagreed, finding that as a VAT group is treated as a single entity, the relevant business was carried on within the group.
3) As the same banking platform services were incorporated into the group's retail banking services, the group continued the same kind of business, allowing the transfer to qualify as a transfer of a going concern.
Case alert Aspiro SA - Court of Justice
Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL), an international organization that provides assurance, tax, and advisory services. However, GTIL and each of its member firms (including Grant Thornton UK LLP) are separate legal entities - they are not a worldwide partnership and do not have agency relationships where one firm is liable for another's acts or omissions. Grant Thornton UK LLP published this disclaimer to clarify its independent legal status within the broader Grant Thornton organization.
Indirect Tax Update 02/2016
HMRC has announced a consultation on expanding eligibility for UK VAT groups following recent EU court rulings. Currently, only corporate bodies under common control can form a UK VAT group. The consultation will consider allowing partnerships and other entities to join VAT groups in order to comply with EU law. HMRC will consult with trade groups before developing policy options for broader consultation later in the year. The changes are aimed at aligning UK VAT law with the EU principle of fiscal neutrality established in recent court cases.
Case Alert: National Roads Authority - CJEU judgment
This document summarizes a case referred to the Court of Justice of the European Union regarding whether tolls charged by the National Roads Authority (NRA) for operating certain roads should be subject to value-added tax (VAT). Generally, activities of public bodies are not subject to VAT, but there is an exception if not charging VAT would significantly distort competition. The Court ruled that the NRA toll roads were not in competition with private toll operators, as customers can only use one road at a time, and private operators could not realistically enter the market. Therefore, the NRA tolls did not need to be subject to VAT in order to prevent competition distortion.
ITU 33/2016
The document summarizes two recent UK Upper Tribunal cases and an announcement from HMRC. The first case involved whether subsidiaries of a college could claim eligibility for VAT exemption like the college. The Tribunal confirmed they could not without express provisions preventing profit distribution in their constitutional documents. The second case involved three truck drivers transporting smuggled alcohol. The Tribunal held the drivers were deemed to be 'holding' the goods and liable for unpaid excise duty. HMRC also clarified its policy on recovering input VAT incurred before VAT registration within certain time limits.
VAT: Transfer of a Going Concern
The transfer of a business between legal entities is generally treated as the 'transfer of a going concern' (TOGC). In such cases, the transfer is ignored for VAT purposes as if there is no supply when the assets are transferred.
Hitherto, HMRC did not accept that the transfer of a business in or out of a VAT group could qualify as a TOGC where the business was conducted solely within the VAT group.
The case of Intelligent Managed Services Ltd challenged that view at the Upper Tribunal and the company was successful in its appeal.
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Case Alert - Mercedes-Benz Financial Services UK Ltd
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Case alert Intelligent Managed Systems Ltd - upper tribunal
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Case Alert: National Roads Authority - CJEU judgment
More from Graham Brearley
ITU 10/2018
The document summarizes three recent court cases related to indirect tax:
1) The Court of Justice of the European Union ruled that a holding company letting property to its subsidiary constituted involvement in management, allowing the holding company to reclaim input tax on acquisition costs.
2) The UK Supreme Court ruled that a company that left a VAT group was not acting as an agent of the group when it later claimed a VAT refund, and thus the representative member of the VAT group was not entitled to the refund.
3) The UK Court of Session ruled that the supply of temporary modular classrooms was a taxable service, not a supply of an interest in land that would be VAT exempt, as the company had no interest in
ITU 07/2018
The document summarizes several indirect tax cases from the UK.
The first case discusses an Advocate General's opinion in a case referred to the Court of Justice by the Irish Supreme Court involving Ryanair's attempt to reclaim VAT fees from an unsuccessful takeover bid of Aer Lingus. The Advocate General believes Ryanair is entitled to reclaim the VAT.
The second case discusses a First-Tier Tax Tribunal case involving Marks & Spencer's "Dine In for £10 with free wine" promotion. The tribunal agreed with HMRC that VAT was due on the wine as customers paid for a package including the wine.
The third case discusses a First-Tier Tax Tribunal case involving a Guern
Case alert: Summit Electrical Installations Ltd Upper Tribunal Judgment
Whether services can be zero-rated when supplied to a main contractor. Whether planning restrictions on occupation prevents zero-rating
ITU 08/2018
The document summarizes two recent indirect tax cases in the UK:
1) HMRC v Summit Electrical Installations Ltd - The Upper Tribunal dismissed HMRC's appeal and agreed with the First-tier Tax Tribunal's decision that the taxpayer could zero-rate its electrical installation services for a new student accommodation building, as the building qualified as a dwelling under VAT law.
2) Bratt Autoservices Ltd - The Court of Appeal dismissed the taxpayer's appeal and agreed with the Upper Tribunal that the taxpayer's 2009 VAT repayment claim was not valid because it did not allocate amounts to the taxpayer's prescribed accounting periods as required by VAT law.
Vat Alert: Reverse Charge on Construction Services
The document discusses HMRC's proposal to introduce a 'reverse charge mechanism' for VAT on construction services to combat VAT fraud in the industry. Under the new rules, the customer would be responsible for accounting for VAT on supplies received rather than the supplier. This would prevent suppliers from charging VAT but not paying it over to HMRC. The draft legislation provides a wide definition of construction services that would be subject to the reverse charge, including building works, repairs, and various site works. While measures to tackle fraud are necessary, commentators note that the broad scope means nearly all subcontracted construction services would be affected, with wider impacts than originally planned.
ITU 09/2018
The document summarizes three recent indirect tax cases:
1) Wetheralds Ltd - The Upper Tribunal ruled that a thermally efficient roofing system was a supply of a new roof rather than insulation materials, and was thus subject to the standard VAT rate of 20% rather than the reduced 5% rate.
2) Abbotsley Ltd - The Upper Tribunal confirmed that affiliation fees paid by proprietary golf clubs to golf associations were exempt from VAT as being essential to sport.
3) Hutchison 3G UK Ltd - The First-tier Tax Tribunal dismissed H3G's argument that the tax point for mobile phone contracts should be when services are used rather than when monthly payments are received.
Case Alert - University of Cambridge
The document summarizes a court case between the University of Cambridge and HMRC regarding whether the University can reclaim VAT incurred on fund management fees. The University operates an endowment fund managed by a third party, which charges fees. The University argues these fees are overheads that can be partially reclaimed under its partial exemption special method. HMRC argues the fees are consumed by investment activities and not reclaimable. Lower courts sided with the University, but the Court of Appeal referred the case to the European Court of Justice for guidance on interpreting relevant VAT directives and prior cases.
Vat Alert - Cost Sharing Groups
HMRC has announced changes to the UK's VAT rules relating to cost sharing groups (CSGs) following recent judgments from the Court of Justice of the European Union. The changes mean the VAT exemption for CSGs will now only apply to entities providing certain public interest services listed in the VAT Directive, such as postal, education, and health services. Banking and insurance entities are no longer eligible. HMRC will also restrict CSG membership to UK entities and require recharges to members be made only at cost. Entities correctly applying previous guidance have until the end of May 2018 to comply with the new rules.
ITU 05/2018
HMRC revises its policy in relation to cost sharing groups following judgments from the Court of Justice. Specifically, HMRC will no longer allow the cost sharing exemption for financial and insurance businesses as the Court of Justice ruled the exemption is not available to these sectors. HMRC will provide a two month transition period for affected businesses to regularize their VAT positions. Additionally, the Court of Appeal case involves determining whether VAT on fund management services provided to the University of Cambridge's endowment fund can be attributed to the overall activities of the University.
Case Alert - Wakefield College - Court of Appeal
The Court of Appeal unanimously dismissed Wakefield College's appeal of a decision that denied VAT zero-rating for the construction of a new college building. While most of the College's students either paid no or subsidized fees, the Court found this still constituted consideration for education and made it an economic activity, precluding VAT zero-rating. The Court distinguished consideration under VAT Directive Article 2 from remuneration under Article 9, finding the College's activities were remunerated and economic in nature. This clarified that satisfying Article 2's consideration test does not automatically deem an activity non-economic under Article 9. The College's attempt to analogize to a prior legal aid case was rejected.
Case alert - Ryanair - Advocate General's opinion
This summary provides the key details from the document in 3 sentences:
The document discusses an Advocate General's opinion in a case referred to the Court of Justice of the European Union concerning whether the Irish airline Ryanair was entitled to reclaim VAT incurred on professional fees relating to its failed 2006 bid to acquire rival airline Aer Lingus. The Advocate General considers that Ryanair is entitled to reclaim the input VAT, both because there was an intention to provide management services and because the cost of acquiring Aer Lingus shares was to directly and permanently extend Ryanair's taxable air passenger transport services business. This is the case even though the takeover bid was ultimately blocked and the management services were not provided.
Case Alert - Marks & Spencer
This document discusses a case regarding a promotional offer by Marks & Spencer (M&S) where customers could purchase three food items for £10 and receive a free bottle of wine. HMRC considered that the deal was actually for four items for £10 and that VAT should be paid on the portion of the £10 attributable to the wine. The First-tier Tax Tribunal agreed with HMRC's view, finding that the economic reality was a package deal rather than items plus a free gift. It determined that the £10 payment should be apportioned with VAT paid on the wine portion. The Tribunal emphasized examining the commercial substance of promotions for accurate VAT determination.
Case Alert - Marriott Rewards / Whitbread - Upper Tribunal
The Upper Tribunal issued a judgment regarding the VAT treatment of payments made through Marriott's customer loyalty rewards scheme. The Tribunal determined that payments from Marriott Rewards LLC to participating hotels were consideration for redemption services provided to MRL, rather than third-party consideration for accommodation supplied to customers. It also found that these redemption services constituted a supply of services related to land in the UK, rather than advertising services, meaning UK VAT was due. Both MRL and Whitbread's appeals were dismissed.
ITU 04/2018
The document provides updates on recent indirect tax cases from the UK courts, CJEU, and Brexit developments.
The CJEU issued an opinion in DPAS Ltd, finding that DPAS's service of collecting payments from patients and transferring them to dentists was not exempt from VAT as a payment transaction, but rather a taxable debt collection service, even though the contracts were amended to provide the service to patients rather than dentists.
The CJEU also ruled in a case from Slovakia that when a supplier issues supplementary VAT invoices to correct an underpayment of VAT, the time limit for claiming VAT refunds should run from the date of the supplementary invoices, not the original supplies.
Finally,
Case Alert DPAS Ltd - Advocate General's opinion
Whether collection of direct debits constitutes a transaction concerning payments or transfers and exempt from VAT - AG considers not
Brexit Alert
This document summarizes an agreement reached between the UK and EU to establish a transitional period after Brexit. Key points include:
- The UK will leave the EU in March 2019 but remain in the single market and customs union until December 2020.
- Goods moving between the UK and EU during this period will be treated as intra-EU trade in regards to customs and VAT.
- The agreement provides businesses more certainty and time to prepare for changes taking effect after the transitional period ends. However, the deal still requires approval from all EU member states.
Case Alert: Kreuzmayr CJEU Judgment
CJEU issues judgment on place of supply issue relating to two supplies but a single transportation - Also deals with recovery of incorrectly charged input VAT
ITU 03/2018
The document summarizes three indirect tax cases:
1) A CJEU case regarding whether payments for credits on an online auction site constitute a preliminary transaction or payment for goods. The Advocate General found credits enabled participation and were a taxable supply of services.
2) The European Commission issued proceedings against Cyprus, Greece, Malta, and the UK for alleged non-compliance with EU VAT law regarding yacht VAT schemes and financial derivatives.
3) A UK tax tribunal case examined whether a property transfer qualified for VAT exemption as a transfer of a going concern. The tribunal found conditions were met for one property but not three others.
Case alert - Boehringer Ingleheim Pharma CJEU Judgment
This document summarizes a court case from the Court of Justice of the European Union regarding the calculation of value-added tax (VAT) on supplies of pharmaceutical products where the initial price is later reduced. The taxpayer, Boehringer Ingelheim Pharma GmbH & Co KG, manufactures and supplies medications to pharmacies in Germany via wholesalers. For supplies covered by public health insurance, Boehringer reimbursed discounts provided to insurance funds, and the tax authority allowed Boehringer to reduce the taxable value. However, for private insurance, similar reimbursements were not allowed as a reduction. The Court ruled that the principle of equal treatment requires both arrangements be treated the same for VAT - where the final
ITU 02/2018
The document provides summaries of three court cases related to indirect tax:
1) The CJEU ruled that a Slovenian taxpayer must adjust its input tax deduction after a court ordered the taxpayer to pay only 44% of debts owed to creditors.
2) The CJEU ruled that the compulsory transfer of property from a Polish municipality to the state in exchange for compensation constituted a taxable supply for VAT purposes.
3) The UK Upper Tribunal largely upheld a previous ruling that a UK house builder could not reclaim input tax on "white goods" supplied as part of new home construction, with a minor exception for cooker hoods supplied between 1982-1984.
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Case alert: Summit Electrical Installations Ltd Upper Tribunal Judgment
Case alert: Summit Electrical Installations Ltd Upper Tribunal Judgment
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Vat Alert: Reverse Charge on Construction Services
Case Alert - Marriott Rewards / Whitbread - Upper Tribunal
Case Alert - Marriott Rewards / Whitbread - Upper Tribunal
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financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
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Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
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Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
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Tax System, Behaviour, Justice, and Voluntary Compliance Culture in Nigeria -...Godwin Emmanuel Oyedokun MBA MSc PhD FCA FCTI FCNA CFE FFAR
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Case Alert HMRC v VWFS - Supreme Court
- 1. © 2017 Grant Thornton UK LLP. All rights reserved. ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton UK LLP is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. This publication has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material in this publication. grant-thornton.co.uk GRT100456 Summary This is a long-running VAT case. VWFS supplies cars and HP to VW customers. It argues that VAT incurred on overheads in its retail sector should be apportioned between its taxable supplies (the sale of the vehicle) and its exempt supplies (the supply of finance). HMRC considers that, as the vehicles are bought and sold for the same price (ie there is no mark-up), the overheads must be attributable solely to the supply of finance. The First-tier agreed with VWFS but this was overturned by the Upper Tribunal. The Court of Appeal then found for VWFS and HMRC appealed to the Supreme Court, which has decided to refer the matter to the Court of Justice of the European Union. 05 April 2017 Supreme Court One of the golden rules of the EU VAT system is that a business may only recover VAT incurred on the purchase of goods and services if it is attributable to the businesses taxable outputs. Where, however, VAT is incurred on overheads (which by their nature cannot be attributed to any particular sales activity), a business must apportion such input VAT between those activities that are taxable and those that are not. A business may only reclaim the proportion of input VAT that is apportioned to the taxable activity. In this case, VWFS makes taxable supplies of cars. It purchases the car from a motor dealer and then sells it on (at the same price) to the customer. VWFS also makes exempt supplies. It supplies HP Finance to the same customer. Thus, from an economic perspective, VWFS makes its profits from its exempt supplies of finance. HMRC argue that, in such circumstances, the overheads are not used in making the taxable supply of the car but are used only in making the exempt supply of credit. As such, it contends that VWFS is not entitled to reclaim the overhead input VAT as it is clearly a cost component of the price of finance and not a cost component of the price of the car. VWFS argue that HMRC accepts that the costs incurred are clearly overheads and that, as a result, EU VAT law requires an apportionment to be made. It argues that HMRC’s attempted attribution of the costs wholly to the exempt supply of finance is contrary to the VAT Directive. In its judgment issued on 5 April 2017, the Supreme Court has decided that it needs to refer the matter to the Court of Justice. The case will be remitted there in due course for a preliminary ruling. In the meantime, the Supreme Court dismissed HMRC’s secondary argument that it had a fall-back position in relation to the extent of any apportionment should it lose its case on the substantive issue. The Supreme Court held that as the matter had been dealt with at the First-tier Tribunal and was not challenged by HMRC at the time, it was too late to re-open those arguments now. Accordingly, the question of the extent of any apportionment is no longer a live issue. Comment – The CJEU will provide guidance in due course on the question of whether VWFS is entitled to reclaim a proportion of its overhead VAT. It may be a further 18 months to two years before the matter is finally resolved. It seems clear that, as submitted by VWFS, cars do not sell themselves and that some overheads must, therefore, be consumed in the course of that process. The fact that none of the overhead costs are incorporated in the price of the car should not, in our view, prevent the recovery of a fair and reasonable proportion of the overhead VAT. UK Supreme Court to refer VWFS to CJEU Case Alert Contact Stuart Brodie Scotland stuart.brodie@uk.gt.com (0)14 1223 0683 Karen Robb London & South East karen.robb@uk.gt.com (0)20 772 82556 Vinny McCullagh London & South East vinny.mccullagh@uk.gt.com (0)20 7383 5100