Talking Points 02/21 and 03/21: KPMG’s weekly indirect tax news update

Talking Points 02/21 and 03/21: KPMG’s weekly indirect

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


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 02/21 included: Updated treatment on sales of second-hand motor vehicles in Northern Ireland and the Healthspan Ltd (2) First-tier Tribunal (FTT) decision on the interpretation of Article 33 of the VAT Directive and whether goods are despatched or transported ‘by or on behalf of the supplier’. Issue 03/21 included: Updated guidance on paying VAT deferred due to coronavirus; a late referral to the Court of Justice of the European Union (CJEU) of a case regarding the taxpayer’s staff voucher reward scheme; and what appears to be the end of the litigation in a case concerning whether defined benefit pension fund management services are exempt insurance transactions.

20 January 2021 | Issue 02/21
This week’s edition begins with HMRC’s change in treatment on the sales of second-hand motor vehicles in Northern Ireland. One of the many issues involving Northern Ireland post 1 January 2021 was that the margin scheme would not apply to second-hand cars bought in the UK and sold in Northern Ireland. This caused significant concern within the second-hand car sector in Northern Ireland as it would make such cars more expensive. HMRC have confirmed that the margin scheme will be applied to the sale of such cars and have issued updated guidance and an updated VAT Notice 718/1 ‘The Margin Scheme on second-hand cars and other vehicles’.

This week’s edition also includes Healthspan Ltd (2) FTT decision. The taxpayer is a Guernsey registered company selling vitamins and health food supplements from the Netherlands to UK consumers. The case concerns the interpretation of Article 33(1) of the VAT Directive which provides that the place of supply of goods dispatched or transported by or on behalf of the supplier is where the transport ends. Applying the guidance in KrakVet Marek Batko (C-276/18), the FTT agreed with HMRC that the goods were delivered ‘by or on behalf of the supplier’ and that VAT was due in the UK.

27 January 2021 | Issue 03/21
This week’s edition begins with HMRC’s updated guidance ‘Pay VAT deferred due to coronavirus (COVID-19)’. A new section ‘Correcting errors on your VAT returns relating to the VAT payments deferral scheme' provides guidance for errors made on VAT returns during the deferral period in 2020 but corrected later. It details what error correction payments can be deferred and what businesses need to do to defer such VAT.

Also this week, we look at another late referral to the CJEU in GE Aircraft Engine Services Ltd (C-607/20). This concerns the taxpayer’s voucher reward scheme. Specifically, it looks at Article 26(1)(b) which provides that there is a deemed supply where there is a “supply of services carried out free of charge by a taxable person for his private use or for that of his staff or, more generally, for purposes other than those of his business.” The taxpayer draws a distinction between its business purpose in providing vouchers to its staff, and the (private) use of the voucher by the staff member. HMRC argue that any business purpose of the taxpayer is irrelevant. 

Finally this week, we report that the Court of Appeal has updated its tracker indicating the United Biscuits appeal has been dismissed. Earlier the Court referred the questions to the CJEU. In its judgment last year the CJEU found that supplies of defined benefit pension fund management services are not insurance transactions so not exempt. A number of businesses had claims stood behind Wheels, and now behind this case.

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