Indirect tax news from the past week
End of Transition Period: HMRC guidance
HMRC have published various guidance on how VAT should be accounted for at the end of the Transition period. In relation to Northern Ireland, existing guidance on accounting for VAT on goods moving between GB and NI has been updated with new sections on sales between the UK and the EU which move through NI, the retail export scheme, personal exports of vehicles from NI to GB, and fiscal warehousing. New guidance has also been published on imports into NI, trading under the NI protocol, and claiming EU VAT refunds. HMRC have also published research into preparations made by customs intermediaries for the end of the Transition Period. It is estimated that the sector will need to process an additional 90-135 million customs declarations annually, on top of the current annual requirement of 29-39 million. For information about how Deloitte can help, see our Global Trade Bureau. (Contact: Andrew Clarke).
Safestore: block insurance policies and self-storage – UT
Insurance taken out by customers using Safestore’s self-storage facilities is generally provided by its captive insurer (Assay, based in Guernsey). If Safestore was acting as Assay’s intermediary as it contended, then it might (under the rules in force at the time) have suffered no input tax restriction on this activity on the basis Assay was outside of the EU, and would only have included its commission (30% of the premium) in its partial exemption calculations. However, the Upper Tribunal has dismissed its appeal, concluding (as the FTT had done) that the similarities to the block insurance policy arrangements considered in Card Protection Plan were inescapable. As illustrated by its approach to FSMA regulation, Safestore was providing the insurance to its customers under a block policy, and should therefore treat the entire premium as its exempt turnover. (Contact: Anna McLaren).
Repaying deferred VAT by instalments in 2021-2
Updated guidance from HMRC provides details about repaying VAT that was deferred between March and June this year. The online opt-in process that will be launched next year will allow businesses to pay the deferred VAT in 2 to 11 equal monthly instalments from April 2021, without incurring interest. Applicants must be up to date with their VAT returns, and able to pay the deferred VAT by direct debit. (Contact: Alistair Lord).
5th Avenue: valuing Cuban cigars for customs duty – CJEU
When valuing a transaction for customs duty purposes, additional royalty payments which the buyer has to pay (even indirectly) as a condition of sale must be added to the amount originally paid or payable for the goods. 5th Avenue Products Trading GmbH entered into an exclusive distribution agreement (EDA) with Habanos SA to be the sole distributor of Cuban cigars in Germany and Austria, in return for 25% of its annual revenues from the cigar sales for four years. The CJEU has ruled that the specific valuation rules on royalty payments did not cover the EDA, as they concerned rights to exploit intellectual property. However, payments under the EDA were still subject to customs duty, because the transaction value includes all payments made or to be made as a condition of sale. There was no need to examine the specific adjustments relating to royalties, because Habanos would not have sold the cigars to 5th Avenue without the EDA agreement and the EDA payments therefore formed part of the customs value. (Contact: Michael Watson).
Dbriefs webcast: Indirect Taxes In The Homestretch
There is a Dbriefs webcast from our Indirect Tax series on Wednesday 2 December, at 12:00 GMT/13:00 CET, hosted by Gareth Pritchard. Entitled Brexit: Indirect Taxes In The Homestretch, our panel of experts will discuss the indirect tax considerations with the end of the Brexit transition period approaching, including key actions in preparation and considerations for the Northern Ireland Protocol. For more information and to register for the webcast, click here.