Indirect tax news from the past week
RCB 11(2021): is COVID testing subject to VAT?
In the UK, over 260 million COVID-19 tests have been carried out in the last twelve months. In RCB 11(2021), HMRC have provided guidance on how to treat the tests for VAT purposes. Testing can be exempt from VAT if a medical professional administers the tests and provides the results. There is some complexity around this – for example, a pharmacist would have to carry out the test themselves for it to be exempt, whereas a GP only has to supervise the test. Tests which are self-administered but later analysed by a medical professional do not qualify for exemption. The RCB accepts that tests for people travelling abroad have a therapeutic purpose and can in theory qualify for exemption as medical care (the tests help protect fellow travellers from infection), but VAT must be charged if the tests are self-administered. Tests are exempt (even if self-administered) if they take place in a state-regulated institution such as a hospital. The RCB points out that businesses are not state-regulated just because they are accredited by UK Accreditation Services or are regulated in some respects by the Care Quality Commission or equivalent in Northern Ireland, Scotland and Wales (i.e. the regulation must be in respect of COVID-19 testing). (Contact: Will Graham).
RCB 12(2021): VAT treatment of gaming machines 2005-2013
In RCB 12(2021), HMRC have confirmed that they are not appealing the First-tier Tribunal decision in Rank Group and 2016 G1. The FTT ruled that (applying fiscal neutrality) the operation of certain gaming machines in venues such as casinos, bingo clubs, arcades and pubs should have been exempt from VAT between 6 December 2005 and 31 January 2013. This decision is the final strand of litigation relating to gaming machines, and follows on from the Upper Tribunal’s decision in favour of Rank and Done Brothers last year. The RCB invites businesses that submitted claims at the relevant time (and appealed any rejection to the FTT) to contact HMRC, providing documentary evidence in support of their claim and details of any input tax that would not have been recovered if the gaming machines had been recognised as exempt. HMRC will now pay valid claims that are supported by adequate evidence. (Contact: Rob Holland).
New guidance on the retail export scheme in Northern Ireland
Although the Court of Appeal rejected a challenge by Heathrow Airport Ltd to the withdrawal of the VAT retail export scheme (RES) in Great Britain earlier this year, the RES continues to apply in a modified form in Northern Ireland (NI). HMRC have issued a new edition of Notice 704 to provide further guidance on some of the changes. For example, NI retailers should explain to passengers making a direct journey to Great Britain that they will not receive a refund under RES (because the retailer must account for import VAT); passengers making an indirect journey must include RES purchases when calculating whether they have exceeded their personal allowances; and overseas visitors leaving NI or the EU on a connecting flight via a GB hub will be considered to be removing the goods directly to their home destination as long as the passenger and the goods do not pass through customs in Great Britain. An updated version of Notice 704/1 on the process for making RES claims has also been issued. (Contact: Andrew Clarke).
Dbriefs webcast: Bringing The Daily Work Of A VAT Manager Alive In SAP S/4HANA®
The recent changes to EU VAT regulations impact a broader range of organisations than ever before, and VAT managers need to access complex data more efficiently to drive accuracy. There is a Dbriefs webcast on Wednesday 8 September 2021 at 12.00 BST/13.00 CEST, hosted by Ann Jackson. Entitled Bringing The Daily Work Of A VAT Manager Alive In SAP S/4HANA®, Ann and Susanne de Nooijer will discuss how organisations can support their VAT managers through SAP S/4HANA, with our guest speaker Ralf Nietupski from Vertex. For more information and to register for the webcast, click here.