Talking Points 41/20 and 42/20: KPMG’s weekly indirect tax news update

Talking Points 41/20 and 42/20: KPMG’s weekly indirect

Read Talking Points to keep up to date on recent Indirect Tax developments.

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Talking Points is a weekly newsletter covering recent developments in Indirect Tax.  We will highlight the most significant items in Tax Matters Digest so readers are aware of issues that may be relevant and can read on for more details where applicable. Issue 41/20 included: the Upper Tribunal’s (UT) decision in which a taxpayer unsuccessfully argued it was supplying outside the scope insurance intermediary services to an affiliated offshore company in Guernsey; the First-tier Tribunal (FTT) decision on input tax recovery by a holding company; and a Brexit and Customs readiness assessment. Issue 42/20 included: Updated HMRC guidance on ‘Changes to VAT treatment of overseas goods sold to customers from 1 January 2021’; Revenue and Customs Brief 19 (2020) VAT - repeal of the VAT (Treatment of Transactions) Order 1992; and updated HMRC Import VAT guidance from 2021.

02 December 2020 | Issue 41/20
This week’s edition begins with the taxpayer’s loss in the Safestore Ltd UT decision. The taxpayer was arguing that it was supplying outside the scope insurance intermediary services to an affiliated offshore company in Guernsey. However, the UT agreed with the earlier FTT that the taxpayer was making exempt supplies of insurance to UK customers. Also this week, we look at the Bluejay Mining Plc FTT. This is the latest case concerning the input VAT recovery by mining holding companies, but in this case the FTT concluded that the taxpayer was carrying out an economic activity and was therefore entitled to input tax recovery.

This week’s edition also looks at some of HMRC’s updated guidance, this includes updated guidance on the ‘Pay VAT deferred due to coronavirus (COVID-19)’ arrangements. This confirms that under the scheme, instead of paying the full amount that was deferred by the end of March 2021, the taxpayer can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022. Also this week, we provide a link to our Brexit and customs readiness assessment. This assessment aims to assist businesses in understanding how supply chains and operations might be impacted after transition and to get practical advice on preparation for the post transition period.

09 December 2020 | Issue 42/20
This week’s edition again looks at more updated guidance from HMRC. This includes the updated ‘Changes to VAT treatment of overseas goods sold to customers from 1 January 2021’. The main change is to the definition of an online marketplace and the other change relates to the invoicing requirements. Other updated guidance includes Import VAT. There had been some confusion as to whether non-established businesses could use Postponed import VAT accounting (PIVA) but the updated guidance makes clear that they can.

This week’s edition also includes Revenue and Customs Brief 19 (2020) VAT - repeal of the VAT (Treatment of Transactions) Order 1992. This announces the Government’s intention to repeal, before autumn 2021, the VAT (Treatment of Transactions) Order 1992. According to the Brief ”this will ensure government departments and NHS bodies cannot exploit the legislation to give themselves a VAT recovery advantage over other taxpayers.” This follows the end of the Northumbria Healthcare NHS Foundation Trust litigation concerning the input VAT recovery by a Trust (a s41 VATA government body) on leased and maintained cars under which the taxpayer secured 100 percent VAT recovery on the lease costs with no output tax due on the salary sacrificed by employees for the car. 

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