Indirect tax news from the past week
End of Transition Period: HMRC guidance
With only a few weeks to go to the end of the Transition Period, volumes of new and updated guidance are being released by HMRC. Links to some of this can be accessed through two new Brexit transition communications resources relating to imports and exports. Amongst the new developments, VAT-registered business trading in Northern Ireland or between NI and the EU have been advised to contact HMRC via a form on the Government Gateway, so that they can continue to account for VAT on acquisitions and dispatches. This is in addition to the Trader Support Service (which over 7,000 businesses have signed up for) which will assist businesses moving goods under the Northern Ireland Protocol. (Contact: Andrew Clarke).
SI 2020/1412: duty-free post-Transition Period
In line with HM Treasury’s announcement in September, SI 2020/1412 will come into effect at the end of the Transition Period and will extend the rules on sales of duty-free excise goods to travellers departing GB for the EU, as well as the rest of the world. The allowances for duty-free alcohol have been increased, and a new simplified method of calculating the excise duty has been introduced. Despite reports of a possible legal challenge by the sector, the SI will also withdraw the VAT Retail Export Scheme (although the scheme will still be operational in Northern Ireland). A Tax Information and Impact Note estimates that the additional VAT from cancelling VAT-free shopping will be almost double the cost of extending duty-free to passengers bound for the EU. (Contact: Jason Craig).
RCB 19(2020): legislative changes for salary sacrifice schemes and cars
In RCB 19(2020), HMRC have announced that the statutory instrument (SI 1992/630) which treats supplies of cars under a salary sacrifice scheme as outside the scope of VAT will be repealed in the next 12 months. As considered in the Court of Appeal case of Northumbria NHS Trust, the SI allowed the Trust to treat the provision of cars to NHS workers as outside the scope of VAT, even though it could recover VAT on procuring the cars under the rules for contracted out services (COS). The RCB considers that it is only government departments and the NHS who will be affected by this change, but businesses operating salary sacrifice arrangements involving cars should satisfy themselves that the operation of their scheme does not depend on SI 1992/630. (Contact: Oliver Jarratt).
London Clubs: no gaming duty on free bets – Supreme Court
Gaming duty is calculated by reference to “gross gaming yield” which is partly based on “bankers’ profits” which in turn depends on “stakes staked” less the value of prizes paid out. Casinos sometimes hand out free bet vouchers or chips which cannot be exchanged for cash (known as non-negotiable chips, or “Non-Negs”) to incentivise regular customers to play more. The Supreme Court has unanimously ruled that Non-Negs should not be treated as stakes staked for duty purposes. The calculation of bankers’ profits is by reference to the real world value of the stakes from the perspective of the banker. In the case of Non-Negs, the customer is essentially enjoying a free bet, which should not be subject to duty. By a majority, the Court also ruled that Non-Negs awarded as prizes could not be deducted from the gross gaming yield for duty purposes. (Contact: Barney Horn).