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Weekly VAT News - 13/04/2017

Investment Trust Companies: Supreme Court rejects claims for restitution
The case of Investment Trust Companies considers whether, rather than seeking repayment of incorrectly charged VAT from suppliers, taxpayers can look directly to HMRC for restitution. In this case, a High Court action potentially allowed investment trusts to circumvent the time limits that would apply to claims under s.80 VATA 1994, and avoid set-off provisions under which their suppliers (investment managers) could only reclaim overpaid VAT net of input tax that they had recovered. However, the Supreme Court has now ruled that such an approach is available only in limited circumstances. The English law of restitution might support a claim by the trusts against their investment managers, but not against HMRC. The fact that the managers had incorrectly charged output tax to the trusts could not be treated as part of the same event as the managers accounting to HMRC for VAT on their returns. In any event, the scheme for claims created by s.80 was not consistent with a concurrent non-statutory ability for trusts to claim direct from HMRC. Finally, the Supreme Court confirmed that s.80 was compatible with EU law. An EU law claim might be possible if it was impossible or excessively difficult for the trusts to secure repayment of VAT incorrectly charged. However, none of the managers had become insolvent, and therefore the trusts had an ability to pursue the managers, and no reason to seek overpaid VAT direct from HMRC. Although the judgment does not entirely exclude the possibility of customers claiming VAT directly from HMRC, it appears that such situations will be rare in practice. To discuss the case, please contact Richard Insole on 020 7303 0062.

Preparing for VAT in the GCC: Deloitte survey
Implementation of VAT in the six GCC countries is on schedule, with States aiming for a ‘go live’ date of 1 January 2018. Businesses are therefore reaching a critical point in preparing for VAT’s introduction. In this context, Deloitte has published a report “Preparing for VAT in the GCC” which surveys attitudes amongst businesses to VAT, and considers how long it is expected to take to prepare for its introduction. Insight is provided from a parallel survey amongst clients of Deloitte’s Malaysian firm, ahead of the introduction of GST in Malaysia in 2015. Amongst other things, this highlights that the complexity of adapting IT systems to new indirect tax regime should not be underestimated. To access the report, please click here.

X BV: valuing imports of defective cars – AG Opinion
A Japanese manufacturer imported three models of cars into the Netherlands, all of which suffered from potential defects. In X BV, Advocate General Saugmandsgaard suggested that the cost of remedying these defects should be adjusted in the customs duty valuation. In one model, the steering coupling bolts had possibly not been tightened properly, and the manufacturer paid for the coupling to be replaced. The AG rejected the Netherlands’ argument that this was only a potential defect and not one which existed at the moment of import. Given the importance of steering couplings, even the risk of component failure should be regarded as a defect. The AG also considered that an adjustment should be made even where manufacturing defects came to light more than 12 months after import. To discuss the case, or its implications, please contact Jeffrie Mann on 020 7007 6975.

2017 Deloitte VAT School
The 2017 Deloitte VAT School is a comprehensive VAT training course that equips participants with VAT knowledge in a case study based environment. It aims to develop participants in practical aspects of UK VAT and is appropriate for anyone who would like to gain a greater understanding of the tax. The course includes an introductory e-learning module followed by four intensive one-day tutorials in our London Office beginning on 19 April, and an optional, industry specific, workshop session. The price for the standard four-module course is 2,400 (excl. VAT) and the enhanced five-module course is 2,700 (excl. VAT). There is a 15% discount for bookings of 3 or more places. For further information, or to book a place, please visit the Deloitte Store or contact Donna Huggard on 020 7303 7914.

This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

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