Weekly VAT News

Single Trade Window – overview and user testing

HMRC have released a policy paper providing an overview of the Single Trade Window. The Single Trade Window “will provide a gateway between businesses and UK border processes and systems, allowing users to meet their import, export and transit obligations by submitting information once, and in one place”. It is anticipated that it will be introduced in 2024. HMRC would like to include border users in the design and testing of the new service, and “are looking for volunteers to get involved with the private beta phase to test the service’s suitability for user needs”. Those interested can register by emailing STWbcrteam@hmrc.gov.uk. (Contact: Sam Kiely) 

VAT and the DIY housebuilders’ scheme: digitisation and extension of time limit – SI

Under the DIY housebuilders’ scheme, VAT refunds can be claimed for certain goods and services used for building or converting a home. As announced in Spring Budget 2023, the scheme is being amended to allow claimants to file refund claims electronically and to extend the time limit for making claims from three to six months from the completion date of the build. Other changes amend the list of documents that must be submitted when a claim is made, including a new requirement for evidence where a building has been converted from a derelict building or shell, and provide that a claim is to be made on a form specified by HMRC notice. The Value Added Tax (Refunds to “Do-It-Yourself” Builders) (Amendment of Method and Time for Making Claims) Regulations 2023, with an accompanying tax information and impact note, implement these measures, which will come into force on 5 December 2023 for claims made on or after that date. (Contact: Ben Tennant)

Warehousekeepers and Owners of Warehoused Goods Regulations – consultation

HMRC are reviewing the Warehousekeepers and Owners of Warehoused Goods Regulations 1999 (WOWGR) as part of a programme of excise duty simplification and modernisation. HMRC are developing proposals on how WOWGR requirements could be reformed, and have issued a questionnaire to seek the views of excise stakeholders, including businesses registered with HMRC under the WOWGR. The consultation will remain open until 29 November 2023. Completed questionnaires can be emailed to holding.movement@hmrc.gov.uk. (Contact: Eleanor Caine) 

Gabel Industria Tessile SpA: recovering overpaid duty from the state – AGO

Until 2012, A2A Energia SpA included an additional provincial tax in its electricity charges to Gabel Industria Tessile SpA, at which point the tax was repealed because it was incompatible with the EU Excise Duty Directive (2008/118/EC). Gabel Industria, however, had only a limited ability to recover the tax from A2A Energia under national law. Could it rely on EU law? A business can sometimes invoke an EU directive to override national law in an action against the state (vertical direct effect), but not normally in an action against its supplier (horizontal direct effect). In Advocate General Emiliou’s opinion, national courts are allowed, but not required, to recognise horizontal direct effect. AG Emiliou also considered what counted as the “state” for these purposes. Vertical direct effect may be asserted not just against tax authorities, but also against certain bodies that are either controlled by public authorities or which have been granted powers to undertake tasks in the public interest. It will be for the national courts to decide whether A2A Energia counted as a quasi-public authority. Assuming that it was not, however, then an interesting possibility might arise. Without horizontal direct effect, it could be impossible or excessively difficult for Gabel Industria to pursue a claim against A2A Energia for tax that it should not have paid. (This is another situation, like Schütte, where “impossible or excessively difficult” does not simply refer to whether a supplier has become insolvent.) If the principle of effectiveness allows Gabel Industria to take action directly against the Italian tax authorities, then it will be entitled to rely on the vertical direct effect of the Excise Duty Directive. If the CJEU endorses the AG’s opinion, and subject to the national courts’ consideration of the national remedies available to Gabel Industria, a further avenue may therefore become available for recovery of the overpaid duty. (Contact: Nicole Faith)

DIAS w Bydgoszcz: correcting VAT on gym entry fees – AGO

In Poland, a credit note has to be acknowledged by a customer before a supplier can adjust its VAT. The Polish tax authorities invoked this rule to deny a claim by B (who ran a gym in Bydgoszcz and had accounted for VAT at 23% rather than 8%). In the opinion of Advocate General Kokott, the tax authorities had missed the point. The EU Principal VAT Directive defines the taxable amount as the consideration paid by the customer, excluding VAT. Therefore, if a customer paid B €123 (charged in the mistaken belief that the standard VAT rate applied) then the actual taxable amount was €123 x (100/108), or €113.89. As such there was no price reduction that could be recognised by issuing a credit note. Instead, B had a claim for a refund of tax levied in breach of EU law, and Poland had to provide an appropriate mechanism for making such a claim. AG Kokott was dismissive of the Polish tax authorities’ argument that refunding the VAT would unjustly enrich B. As a general rule, B would have been significantly disadvantaged compared to a neighbouring gym which had applied the correct VAT rate, and the tax authorities had provided no proof that B had passed on the burden of the additional VAT to its customers. Her rejection of the argument was possibly influenced by the fact that the Polish tax authorities appear to have told B to charge VAT at 23%. In those circumstances, the tax authorities would benefit from its own unlawful action if they were allowed to invoke a defence of unjust enrichment. (Contact: David Walters)

This week’s CJEU court calendar

On 23 November, the CJEU will deliver judgments in Westside Unicat, on the VAT place of supply of live streaming services, and J. P. Mali, on whether mandatory customs penalties are proportionate.

Dbriefs webcast – Autumn Statement

On Thursday, 23 November 2023 at 16.00, Amanda Tickel will host a Dbriefs webcast on the UK Autumn Statement 2023. The panel will discuss how the UK’s economy is changing, tax measures affecting businesses, the taxation of individuals, and indirect tax changes.