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Weekly VAT News - 16/12/2013

New building for Wakefield College was zero-rated – Tribunal decision
Wakefield College has succeeded in
the most recent Tribunal decision relating to zero-rating of buildings used “solely for a relevant charitable purpose”, a decision that is likely to be very significant for the FE sector.  

The College’s appeal was
rejected by the F-tT in January 2011 on the basis that some of the education in the building was a business activity.  

However, the
Upper Tribunal remitted the matter to the F-tT to enable it consider the treatment of students who pay only part of the cost of their course and also whether any “business” use of the building was de minimis.  

The F-tT has now concluded that “…the supplies … to the students who make part-payment are not to be included in any calculation of the level of business use …”.

It follows that any business use of the building is likely to be de minimis so the building should qualify for zero-rating.  For further information, or to discuss the implications of the case and opportunities to reclaim VAT on similar building work, please contact
Stuart Savage on 0113 292 1689.

Defined contribution pension fund is a “special investment fund” – A-G Opinion

Advocate General Cruz Villalón has delivered his
opinion in the Danish case of ATP PensionService A/S, about the VAT treatment of services relating to a "defined contribution" pension fund.  

The Opinion focuses on the first question raised in the reference from the Danish Řstre Landsret - whether a defined contribution pension fund should be viewed as a "special investment fund" for the purposes of the then current Sixth Directive (the Opinion acknowledges that the relevant provisions in the current VAT Directive are substantially the same as those in the Sixth Directive).  

His overall conclusion is that EU VAT law “… has to be interpreted as meaning that the term ‘special investment funds as defined by member states’ has to include occupational pension funds where such funds pool the assets of several beneficiaries, and allow the spreading of the risk over a range of securities.

This is only the case where the beneficiaries bear the risk of the investment.  

The fact that the contributions are made by their employers for their benefit under a collective agreement … and that payments out of the fund are only made upon retirement is irrelevant, as long as the beneficiary has a secure legal position with respect to his or her assets. …”.  

If the CJEU follows the Opinion when it finally decides the case (probably sometime in 2014) the decision should mean that the “management” of defined contribution pension schemes is exempt from VAT.  

For further information about the case, and to discuss the implications of it, please contact
Pauline Hawkes-Bunyan on 0207 303 2720.

Reverse charge for mobile phones, CPUs, etc. and emissions trading to continue

In the wake of
changes to the EU law made in July, HMRC has now confirmed that reverse charging for certain supplies of mobile phones, integrated circuit devices and emissions trading, which was introduced to stem “missing trader” (MTIC) frauds, will continue until at least the end of 2018.  

The measures were originally permitted as derogations from the VAT Directive but the change in EU law has removed the need for the derogations.  

For further information about the announcement, and to discuss the issues posed by MTIC fraud generally, please contact
Tim Jones on 0207 007 1013.  

New rules for some gambling duties from 1 December 2014

From 1 December 2014, HMRC is changing the rules for Remote Gaming Duty (RGD), General Betting Duty (GBD) and Pool Betting Duty (PBD).

RGD applies to remote gambling, for example casinos and bingo played through the internet; GBD covers more general betting such as fixed-odds betting and pool bets on horse and dog racing and PBD applies to pool betting (other than on horse and dog racing) and non fixed-odds betting.  

Premises based betting and the treatment of spread betting will be unaffected except for some administrative changes.  

HMRC has published a brief overview of the key changes and what businesses will need to do if the changes affect them.  

For more details about the changes, please contact
Philip Munn on 0207 007 7181.  

Budget 2014 on 19 March  

The Chancellor of the Exchequer has indicated to the Treasury Select Committee that the 2014 Budget Statement will be delivered on 19 March, probably starting at 12:30pm as usual.

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