Indirect tax news from the past week
04/12/2023
Autumn Finance Bill 2023 – Interpretation of VAT and excise measures
The Autumn Finance Bill 2023 has been published, together with explanatory notes. Included in the Bill is clause 27, setting out the provisions regarding the interpretation of VAT and excise law in light of the Retained EU Law (Revocation and Reform) Act 2023. By way of Resolution approved by MPs in accordance with the Provisional Collection of Taxes Act 1968, the provisions of clause 27 will have statutory effect, and will come into force on 1 January 2024. (Contact: Judith Lesar)
VAT group registration delays
As a result of delays in HMRC’s processing of VAT grouping applications, a number of taxpayers have faced issues regarding the correct effective date of registration (EDR). The Association of Taxation Technicians (ATT), and other professional bodies, have reported that HMRC have found a solution to provide the correct EDR and resolve related issues. HMRC will be contacting those affected shortly to communicate next steps. The proposed solution will only apply where the disputed EDR was caused by HMRC delays. (Contact: Andrew Clarke)
HMRC ‘one-to-many’ campaign – Missing VAT returns
The Chartered Institute of Taxation (CIOT) has reported that HMRC have launched a ‘one-to-many’ letter campaign to alert businesses that they appear to have missing VAT returns. Businesses are asked to check which returns are overdue and submit them, and pay the VAT due. Businesses that are no longer trading are asked to cancel their VAT registration accordingly. Another version of the letter is being sent to agents, asking them to identify clients with overdue VAT returns and work with them to submit those returns. (Contact: Donna Huggard)
EU Central Electronic System of Payment information
From 1 January 2024, new reporting obligations will take effect for European Union financial institutions, requiring the disclosure of cross-border payment data – known as Central Electronic System of Payment information (CESOP). CESOP is intended to address the VAT gap and fraud in e-commerce. The rules will impact EU payment service providers (PSPs), including banks, card issuers and acquirers, e-money providers, and online platforms that have their own in-house regulated PSPs. The first CESOP filings are due by 30 April 2024 at the latest. The European Commission has recently published updated guidance on the CESOP requirements, including guidelines for the reporting of payment data and frequently asked questions. (Contact: Eric Gilvray)
SC Westside Unicat SRL: VAT on interactive video chats – CJEU
The delivery of interactive video chats generally involves a business acting as an intermediary between performer and customer. In Geelen, the CJEU previously identified one such intermediary as providing an entertainment service, as he brought together the performer and customer, and arranged the necessary IT infrastructure. Under the EU Principal VAT Directive (PVD) at the time (2006-09), this was subject to VAT where Mr Geelen performed his service (in the Netherlands). In Westside Unicat, however, the role of the intermediary was split, and had to be assessed in light of changes made to the PVD in 2009-10. Westside Unicat (based in Romania) made a recording studio available to performers, and acted as their agent in dealings with StreamRay USA Inc in the US; but it was StreamRay that contracted with customers for the delivery of the video chats. By the time of these services (2019-20), the PVD stated that admission to entertainment events (rather than simply entertainment services) should be subject to VAT where those events actually took place. According to the CJEU, this rule referred to marketing the right of admission to an event to the public (such as selling tickets to an event). Services provided by a recording studio (Westside Unicat) to the operator of an internet streaming platform (StreamRay) were not concerned with granting customers the right to access content. Westside Unicat was not therefore obliged to charge Romanian VAT on its services to StreamRay. (Contact: David Walters)