Weekly VAT News

Cascade Care Limited: VAT exemption for welfare services – FTT

The First-tier Tribunal has again considered the VAT treatment of health and welfare services. While the circumstances of the case are relatively niche, the statutory interpretation issues are potentially of wider interest. Cascade Care Limited provided residential and supported living services to adults with mental health conditions and learning difficulties. Cascade argued that the services it supplied in Wales fell outside the VAT exemption for welfare services supplied by a state-regulated private welfare institution, on the basis that its services were regulated under the Welsh legislature, which was not included in the definition of “state-regulated”. HMRC rejected Cascade’s contention, and Cascade appealed to the First-tier Tribunal. The FTT has held that the exemption applied. It agreed with HMRC that it was clearly Parliament’s intention “to capture all entities that could … enact primary legislation”. Applying the principle from Inco Europe that courts were allowed to read legislation in such a way as to correct an “obvious drafting error”, it was permissible for the FTT to read the legislation as if it included Welsh primary legislation, meaning that Cascade’s services in Wales were indeed “state-regulated”. Therefore the FTT dismissed Cascade’s appeal. Following JD Wetherspoon, this is the second occasion this year in which the FTT has applied the Inco principle in HMRC’s favour in a VAT appeal. (Contact: Oliver Jarratt)

EU: VAT Committee

The European Union’s VAT Committee met on 17 November 2025. The agenda included a number of issues of interest, in particular, the Committee considered the CJEU judgment in Arcomet Towercranes on VAT and transfer pricing, and a question from Italy on whether services supplied by social media platforms to users are in exchange for users’ personal data and therefore subject to VAT. As the VAT Committee is an advisory committee only, any guidelines it issues on the matters it discusses are not an official interpretation of EU law, and do not bind the European Commission or EU Member States. (Contact: Donna Huggard)

Effective carbon rates – OECD report

The OECD has published its annual report on Effective Carbon Rates 2025: Recent Trends in Taxes on Energy Use and Carbon Pricing. The report covers 79 countries, collectively accounting for approximately 82% of global greenhouse gas (GHG) emissions. The report examines governments’ use of effective carbon rate (ECR) instruments including carbon taxes, emissions trading systems (ETSs), and fuel excise taxes. The OECD says that “As carbon pricing continues to expand across countries and sectors as part of broader carbon mitigation efforts, design choices are increasingly diverse and flexible to reflect a variety of policy objectives including reducing emissions, raising public revenue, and strengthening energy affordability, energy security, and competitiveness.” According to the report, carbon taxes and ETSs are in place in over 50 countries. 44% of GHG emissions from the 79 countries covered were subject to an ECR instrument (i.e., a carbon tax, a carbon price from an ETS, a fuel excise tax, or a combination of these) in 2023, compared to 33% of emissions in 2018. The report states that “Fuel excise taxes remain the most used ECR instrument, covering 24% of emissions, versus 5% for carbon taxes and 22% for ETSs.” (Contact: Zoe Hawes)

Autumn Budget 2025

On 26 November, the Chancellor of the Exchequer, Rachel Reeves, will present her Budget. This will be accompanied by the Office for Budget Responsibility’s outlook for the UK economy and public finances. For insights on the Budget announcements, please visit our Autumn Budget 2025 page. There will be a Dbriefs webcast on Thursday, 27 November 2025 at 12.00, during which our panel of experts will discuss the OBR’s outlook and the Budget’s key tax measures and their implications for business.

VAT case calendar

On 26 November, the CJEU will deliver its judgment in Versãofast on the negotiation of credit. On 27 November, there will be an Advocate General opinion in P-GmbH & Co. KG on the tour operators’ margin scheme.