Indirect tax news from the past week
28/10/2024
Boehringer Ingelheim Ltd: VAT on pharma rebates – FTT
Boehringer Ingelheim Ltd (BIL) supplied branded pharmaceutical products in the UK to the NHS at the standard rate of VAT. Between 2014 and 2020, BIL made payments to the Department of Health and Social Care (DHSC) under two voluntary schemes, the purpose of which was ultimately to control the NHS’s spend on branded medicines. The payments were calculated as a percentage of net sales and were made after the supplies had been made. BIL submitted claims for over-declared VAT, on the basis that the payments should have been treated as reducing the consideration for its products. HMRC rejected the claim. The First-tier Tribunal has agreed with BIL, and held that the payments made by BIL to the DHSC reduced the value of the consideration received by BIL for its supplies of pharmaceutical products, and thus also reduced the taxable amount of such supplies. The FTT considered that the relevant legislation was clear: where the price of a supply is reduced after it has taken place, the taxable amount must be reduced. The FTT disagreed with HMRC’s submissions that there was an insufficient link between the payments to the DHSC and the supplies of the pharmaceutical products to NHS bodies. The FTT also rejected HMRC’s submission that any repayments of VAT would unjustly enrich BIL. Accordingly, BIL’s appeal was allowed. (Contact: Chris Cherrill)
Budget Responsibility Act
The Budget Responsibility Act 2024 (Commencement) Regulations 2024 were made on 14 October 2024, bringing the Act into force with effect from 15 October 2024. The Act ensures that all ‘fiscally significant’ permanent tax or spending change announcements made by governments will be subject to an independent assessment by the Office for Budget Responsibility (OBR). (Contact: Donna Huggard)
HMRC’s approach to working with large businesses
Paul Dennis, who leads Deloitte’s UK Tax Controversy team, has held an interview with Nicole Newbury, Director of Large Business at HMRC, to discuss a range of topics on how HMRC works with large businesses. The discussion included the results from HMRC’s Annual Report, the outcome of the Large Business Survey, the process for Business Risk Reviews, effective dispute resolution, and the future of the department. See TaxScape for the details.
Autumn Budget 2024
The Chancellor of the Exchequer, Rachel Reeves, will present her first Budget on Wednesday, 30 October 2024. For insights on the Budget announcements, please visit our Autumn Budget 2024 page. There will be a Dbriefs webcast on Thursday 31 October 2024 at 12.00, hosted by Amanda Tickel, Deloitte’s Global Head of Tax and Trade Policy, during which our panel of experts will provide an update on the previous day’s announcements and their implications for businesses and individuals.