Weekly VAT News

HMRC: Transformation Roadmap

On 21 July 2025, the government published HMRC's Transformation Roadmap. The roadmap sets out HMRC’s plan to deliver their three priorities: improving day-to-day performance and the customer experience, closing the tax gap, and reforming and modernising the tax and customs system. With respect to improving performance and the customer experience, HMRC are aiming to be a ‘digital-first’ organisation by 2030, with at least 90% of HMRC interactions taking place digitally, an increase from the current 76%. To close the tax gap, the roadmap reiterates the government’s plan to hire 5,500 new compliance officers and 2,400 more debt management officers, and the use of digitalisation and improved use of data, including third-party data. To reform and modernise, HMRC will overhaul its legacy IT infrastructure and invest in AI, data capabilities, and a highly-skilled workforce. There is also a commitment to share data and collaborate across government, one aspect of which is to explore integrating case management systems between HMRC and the First-tier Tribunal to speed up the appeals process. Annex B of the roadmap includes HMRC’s planned deliverables for digital improvements to the customer experience. For VAT, these consist of exploring improvements to the registration process, automation options to improve the de-registration process, a repayment tracker, and the adoption of e-invoicing. For customs, these are to improve the online trade tariff service, ease of use and availability of information for the goods vehicle movement service, and integration across customs platforms. (Contact: Andrew Clarke)

L-Day 2025

Also on 21 July 2025, the government announced the publication for technical consultation of draft legislation for the next finance bill, as well as summaries of responses to previous consultations and one new consultation on land remediation relief. The only indirect tax-related issue was draft legislation to ensure all border locations are responsible for providing and funding their own customs infrastructure. The technical consultation closes on 15 September 2025. Whilst not indirect tax-specific, other draft legislation was published in the areas of tax administration, on modernising and mandating tax adviser registration with HMRC and better use of new and improved third party data, on proposals to close in on promoters of marketed tax avoidance and enhancing HMRC’s powers: tackling tax adviser facilitated non-compliance. For an overview of all the L-Day announcements, see our article Legislation Day 2025. (Contact: Donna Huggard)

Millennium Cash & Carry Ltd: SDIL credits – FTT

Since 6 April 2018, the Soft Drinks Industry Levy (SDIL) has applied to UK-produced or imported soft drinks containing added sugar. The First-tier Tribunal has considered the first SDIL tribunal appeal. Millennium Cash & Carry Ltd had claimed SDIL credits in respect of soft drinks that it had exported but not itself imported. Millennium accepted, for the purpose of the appeal only, that it was not entitled to do so, but contended that HMRC had no power to withdraw the credits or to raise assessments for their repayment, on the basis that the SDIL regulations were defective. HMRC argued that although the relevant statutory instruments did not include an explicit mechanism to withdraw claims to which there was no entitlement, the missing mechanism should be implied. Millennium had submitted corrections to SDIL returns for some periods, removing the export credit claims. The FTT found that HMRC had implied powers under care and management provisions to verify and give effect to the corrected SDIL returns. However, HMRC had no such power for the periods in which Millennium did not submit a correction, and the regulations did not provide for a denial of the credits. Under the legislation, HMRC’s only power was to raise assessments where an ascertained amount of SDIL was due. The FTT held that HMRC were able to assess Millennium for SDIL that was reported on returns but not paid because the amount of SDIL payable was incorrectly reduced by the credits. However, for periods in which no SDIL was due, but only credits claimed, HMRC had no means of removing the credit balance, which would remain on account to be set off against future SDIL due. Millennium’s appeal was allowed in part. (Contact: Charlie McMillan)

VAT case calendar

On 29 July, the Supreme Court will issue its judgment in D.E.L.T.A. Merseyside Limited and another v Uber Britannia Limited on the interpretation of the Local Government (Miscellaneous Provisions) Act 1976. The dispute concerns the regulation of private hire vehicles outside of London, but the issue it addresses potentially has VAT consequences.

On 1 August, the CJEU will deliver judgments in Hatar Diszkont on the VAT treatment of the administration of a tourist VAT refund scheme, Finanzamt Osterreich (TVA facturée par erreur à des consommateurs finals II) on the correction of VAT incorrectly charged to consumers, Galerie Karsten Greve on the application of the margin scheme for works of art, and W. (Exportation à l’insu de l’assujetti) on whether goods declared as dispatched were exported.