HMRC issued a brief setting out its unchanged policy on VAT recovery by holding companies, requiring a direct link between input VAT and taxable supplies. HMRC has also revised its guidance on VAT and holding companies. With less than a week until October 1st, HMRC still has not published information on registering for the Mini-One-Stop-Shop (MOSS) system for collecting VAT on digital services supplied to EU customers, which takes effect January 1st, 2015. Businesses need to register under MOSS well before this date.

1. Indirect Tax Update for week ending 26 September 2014
Not a great deal to report this week. HMRC has issued a Revenue & Customs Brief setting out its policy in relation to the recovery of VAT by holding companies and, as we approach 1 October, we await details from HMRC in connection with the registration process for the Mini-One-Stop-Shop (MOSS).
In a relatively quiet week in the indirect tax world, HMRC has issued Revenue & Customs Brief 32/2014. This follows the recent Court of Appeal judgment in the case involving BAA. In essence, the Brief announces that HMRC has reviewed its policy and confirms that, for input tax to be recoverable by a holding company, there has to be a direct and immediate link between the input VAT and taxable supplies (which includes supplies not chargeable to UK VAT but which carry the right to recover input tax). This statement from HMRC tells us nothing new. Indeed, HMRC, after having reviewed its policy in the light of the BAA case has stated in the Revenue & Customs Brief that its policy remains unchanged.
HMRC has, however, revised its guidance on VAT and holding companies. The new guidance can be found by following this link.
Comment – HMRC's brief highlights the fact that the German court has referred two cases to the Court of Justice of the European Union in relation to the recovery of VAT by holding companies. It is likely that the outcome of these two cases will inform HMRC's policy on holding companies going forward so there is unlikely to be any definitive word on this subject until the CJEU has given judgment (likely to be a further 18 months away). In the meantime, holding companies should be reviewing their current input tax recovery strategy.
With less than a week to go to 1 October 2014, HMRC has still not published any information relating to the process of registering for the Mini-One-Stop-Shop. We were expecting the registration system to be up and running on 1 October 2014 but, as yet, there is no sign of any guidance being issued. On 1 January 2015, the 'place of supply' of 'digital' services supplied to consumers is to change and VAT will become due in the customer's Member State. Rather than register for VAT in each Member where such supplies are made, UK VAT registered businesses supplying telecommunications services, broadcasting services and other electronically supplied services to non- business customers located in other Member States of the EU can elect to register under the MOSS Scheme.
Comment – It is to be hoped that the MOSS registration system is up-and-running in the very near future. Affected businesses need to ensure that they are registered under MOSS well before the 1 January 2015 implementation date. For further information in relation to any of the issues highlighted in this Indirect Tax Update please contact: London/South East Karen Robb karen.robb@uk.gt.com The Regions Stuart Brodie stuart.brodie@uk.gt.com The Midlands Mike Sheppard mike.sheppard@uk.gt.com
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Indirect Tax Update 35/2014