Indirect tax news from the past week
Royal Mail Group Litigation: no obligation to issue VAT invoices – CA
Until the CJEU’s judgment in TNT in 2009 it was commonly believed that Royal Mail should exempt its business services, whereas that judgment confirmed that it should have charged VAT. One group of claimants is therefore trying to persuade the CJEU (in Zipvit) that they should be entitled to recover input tax even in the absence of VAT invoices. Another group is demanding that Royal Mail should issue VAT invoices now, but the Court of Appeal has rejected their claim. Applying the reasoning of AG Kokott in Zipvit, the CA considered that the claimants did not have a valid claim as they could not demonstrate that VAT had been passed on to them. However, even if they had paid VAT, that still did not give rise to a claim (“a private claim in EU law”) against Royal Mail. The appeal was dismissed. (Contact: Anna McLaren).
Updated guidance: postponed import VAT accounting
For a few days at the start of each month, businesses which are authorised to use simplified declarations for imports can submit supplementary declarations for goods imported in the previous month. HMRC have identified that the postponed import VAT accounting (PIVA) system is not including these entries on the correct monthly PIVA statement. Updated guidance confirms that businesses can either use the figures shown on the statements to complete their VAT returns, or (if they can identify affected entries) reallocate import VAT to the correct month. The guidance also confirms that the duplication of import VAT on some statements in January and February was rectified on replacement statements issued in April, and recommends that businesses check that the correct amounts were included in their VAT returns. (Contact: Alistair Lord).
Changes to the use of red diesel in private yachts from 1 October
In 2018, the CJEU ruled that the UK should not allow owners of private yachts to fill up with red diesel, which is subject to a lower effective rate of excise duty (even though the UK collects additional duty if red diesel is used for propelling the yacht rather than for heating and lighting). In accordance with the EU withdrawal agreement, it will therefore become illegal to put red diesel into the main tank of a private pleasure craft in Northern Ireland from 1 October 2021. In new guidance, HMRC set out how fuel suppliers can offer a discount to owners of yachts with a single fuel tank, equivalent to the additional excise duty on 40% of the fuel (which is assumed to be for heating and lighting). The supplier can then claim reimbursement of the discount from HMRC. The guidance also explains how to deal with differences between the approaches in NI and GB to the use of red diesel in private yachts. The associated legislation can be found in SI 2021/780. (Contact: David Walters).
Profit Europe: anti-dumping duty on cast iron – CJEU
In 2012, the EU imposed an anti-dumping duty on malleable cast iron threaded tube fittings imported from China (57.8%) or Thailand (15.5%). Profit Europe, which had been classifying its imports in various different ways, persuaded the CJEU that fittings made from spheroidal graphite cast iron (ductile cast iron) should not be classified as “malleable” but as “other” cast iron fittings. The CJEU has ruled, however, that Profit Europe’s initial success over classification did not mean that the imports escaped duty. ADD regulations frequently refer to subheadings in the Combined Nomenclature, but this may not be sufficient to describe the particular goods which are subject to ADD. The CJEU ruled that its earlier decision on tariff classification only had an indicative value over whether imports were subject to ADD. At the time, ductile cast iron was generally understood to include malleable cast iron, and based on that understanding Profit Europe’s imports should be subject to ADD. (Contact: Eleanor Caine).