Weekly VAT News

Colchester Institute Corporation: Further education business activities – CA

In 2024, the Upper Tribunal held that the provision of further education by Colchester Institute Corporation (the College) funded by government agencies was the supply of services for consideration (and not a non-business activity, as had previously been considered to be the case). This decision followed a 2020 UT decision between the same parties on related issues impacting the further education sector. HMRC challenged both decisions, and the Court of Appeal has now found in favour of the College. HMRC appealed the UT decisions on two grounds. First, that the UT erred in its analysis of the CJEU judgment Le Rayon d’Or Sarl, in which it was held that a lump sum paid by a state sickness insurance fund to care home providers constituted consideration for the supply of healthcare provided by those homes to residents, and was within the scope of VAT. The CA agreed with HMRC that Rayon d’Or did not itself determine the appeal in the College’s favour, as the UT had concluded. The CA did, however, reject HMRC’s argument that the case provided no support to the College’s case. HMRC’s second ground was that the UT had erred in interpreting and applying the requirement for a ‘direct link’ between the supplies made and the consideration received. (The UT had gone on to consider the merits of the College’s case in the event that Rayon d’Or was not determinative of the appeal.) The CA reviewed the funding arrangements and other factors and concluded that the government agencies were providing funds in return for the provision of services by the College to students in the form of approved courses, and not funding the College generally on condition it provide such courses. Accordingly, the CA rejected HMRC’s second ground, and dismissed the appeal. It remains to be seen whether HMRC will appeal the judgment to the Supreme Court, and what, if anything, the judgment means in respect of any adverse effects on the further education sector’s ability to access VAT reliefs such as the zero rate on the construction of relevant charitable buildings and the reduced rate on supplies of fuel and power. (Contact: Laurie Pay)

Boehringer Ingelheim Limited: VAT on pharma payments – UT

Boehringer Ingelheim Limited (BIL) supplied branded pharmaceutical products to the NHS at the standard rate of VAT. Between 2014 and 2020, BIL made payments to the Department of Health and Social Care (DHSC) under two voluntary schemes, the purpose of which was to control the NHS’s spend on branded medicines. The payments were calculated as a percentage of net sales and were made after the supplies had been made. BIL submitted claims for over-declared VAT, on the basis that the payments should have been treated as reducing the consideration for the products, which HMRC rejected. The First-tier Tribunal agreed with BIL. However, in overturning the FTT decision, the Upper Tribunal has held that BIL was not able to reduce the consideration for payments made under the schemes. The UT considered that DHSC was not part of the supply chain. There was not a sufficient link between the payments made by BIL and the original supplies. While the DHSC funded the NHS, including the purchase of products and medicines, there was no direct link to any individual supply, only general, non-ringfenced funding. The payments were not a reduction in the price paid by the final consumer, but were payments made outside the supply chain, which did not reduce the amount of consideration. The UT set aside the FTT’s decision and remade it, allowing HMRC’s appeal, except in relation to a limited number of payments made in respect of medicines that BIL had supplied directly to the DHSC. (Contact: Chris Cherrill)

GfC18: Help with VAT place of supply of services in the oil and gas sector

HMRC’s latest Guidelines for Compliance (GfC), Help with VAT place of supply of services in the oil and gas sector – GfC18, set out “HMRC’s recommended approach to deciding the place of supply of services” in the oil and gas sector, in particular services supplied to offshore installations such as platforms and rigs. In determining the place of supply, the guidelines state, the ‘special rules’ for certain types of supplies must be considered first. For example, the place of supply of services directly related to land will be where the land is located. Services directly related to fixed production platforms, such as surveying and assessing property, seismic surveying, construction, and maintenance, may be land-related. Accordingly, where the platform is located outside the UK 12 nautical mile limit (the UK’s territorial limits), such supplies will be outside the scope of UK VAT. In addition, services subject to use and enjoyment provisions, such as electronically supplied services and equipment hire, may be outside the scope of UK VAT if exclusively used and enjoyed outside of the UK, for example, on offshore installations outside the UK’s territorial limits. For supplies not covered by special rules, the general place of supply of services rule applies, which for business-to-business supplies means where the customer belongs. In determining where a customer belongs, it is necessary to consider where the business has its business establishment and any other fixed establishments, and which is most closely related to the supply. The guidelines state that offshore installations may qualify as fixed establishments (but all facts need to be considered), in which case supplies may be outside the scope of UK VAT when made to an installation located outside the UK’s territorial limits. The guidelines also consider a number of other industry-specific VAT issues, such as the supply of personnel. They refer throughout to HMRC guidance and legislation providing further information. (Contact: Louise Bonham Corcoran)

Deloitte Intrastat Guide 2026

The 2026 edition of the Deloitte Intrastat Guide has been published, which sets out Intrastat filing requirements and procedures for the EU member states and, for the United Kingdom, Northern Ireland. Intrastat is a statistical declaration that records intra-EU movements of goods above a certain threshold. There are some differences in how EU member states apply the Intrastat rules, and affected businesses accordingly need to understand the rules for each member state.

Dbriefs webcast

On Wednesday, 1 April at 12.00, there will be a webcast on Responding to Labour Supply Chain Fraud Risks. Recent years have seen a rise in labour supply chain fraud, in particular relating to VAT and employment taxes frauds. Our Deloitte presenters will be joined by speakers from HMRC to discuss how the fraud can arise, consequences for businesses, what businesses can do to reduce the risk, and the actions being taken by HMRC. 

Weekly VAT News will be taking an Easter break – the next issue will be published on 13 April 2026.