Weekly VAT News

Autumn Budget 2024 – indirect tax measures

There were a number of indirect tax measures included in the Autumn Budget 2024 and accompanying Overview of tax legislation and rates. As previously announced, VAT will apply to private school fees with effect from 1 January 2025, and HM Treasury published a response to the technical consultation issued on this measure in July. HM Treasury/HMRC issued a response to the consultation on the introduction of a UK carbon border adjustment mechanism (CBAM), confirming its introduction from 1 January 2027, but excluding glass and ceramics, and setting the registration threshold at £50,000. Air Passenger Duty (APD) rates will increase, and there is a consultation on extending the scope of APD for private jet travel. Fuel duty rates will continue to be frozen, and the temporary 5p cut in fuel duty rates will be extended to 22 March 2026. Plastic packaging tax rates will increase in line with inflation, and HMRC issued a response to the consultation on the mass balance approach. The soft drinks industry levy (SDIL) will be increased over the next five years to reflect inflation between 2018 (the year of its introduction) and 2024, and increases will also reflect future inflation. The government is undertaking a review of the current SDIL sugar content thresholds and the exemptions for milk-based and milk substitute drinks. The government confirmed that a new vaping products duty will take effect from 1 October 2026. HM Treasury issued a response to the previous technical consultation on the duty and a new technical consultation. Details of all the indirect tax measures from the Spring Budget can be found on TaxScape. A recording of our Dbriefs webcast on the Autumn Budget is available to watch on demand. (Contact: Andrew Clarke)

Procurement International Ltd: zero rating of exported goods – FTT

Procurement International Ltd (PIL) was a reward recognition programme fulfiller. It supplied goods to businesses that ran reward recognition programmes (reward programme operators – RPOs) on behalf of their customers which, in turn, wished to reward their customers and/or employees (reward recipients – RR). The RPOs provided a platform through which rewards could be chosen and ordered, and the RPOs would then place orders with PIL for the goods. A shipper (Royal Mail for smaller and UPS for larger and more valuable goods) collected the goods from PIL and shipped them directly to the RR. PIL had zero-rated the supply of goods sent to RRs overseas. HMRC contended that where the RPO was VAT-registered in the UK, PIL was making a supply of goods to the RPO at a time when the goods were situated in the UK, and as such there was a standard-rated supply. The First-tier Tribunal has held that these were single composite supplies of delivered goods, and the supplies were zero-rated as supplies of exported goods. PIL sent the goods to a destination outside the UK and was responsible for arranging the transportation. The supplies were not made on terms that the RPOs collected or arranged for collection of the goods in order to remove them from the UK. The FTT found that the RPOs took possession of the goods on delivery to the RR, and not before. PIL’s appeal was allowed. (Contact: Donna Huggard)

Hotel La Tour: VAT recovery on fundraising share sale – SC

The Supreme Court has granted Hotel La Tour permission to appeal against the Court of Appeal judgment in Hotel La Tour on the VAT recovery of costs incurred in a fundraising share sale.

This week’s CJEU VAT calendar

On 7 November, the CJEU will deliver its judgment in Lomoco Development and Others on supplies of building land.

Dbriefs webcast

On 5 November 2024 at 12.00 there will be a webcast on Sustainability reporting: defining the role of tax. Hosted by James Wright, our panel will discuss recent sustainability reporting developments, including the EU’s Corporate Sustainability Directive (CSRD), and if and how tax should be reflected.