Insurance – disastrous result in European case on outsourcing
VAT may have to be charged by businesses undertaking "back office" work for insurance businesses following the ECJ’s decision in the case of Arthur Andersen & Co. (now Accenture). The ECJ decided that Andersen was not acting as an insurance broker or insurance agent and that its supplies were subject to VAT. Unless some grandfathering is allowed, this decision will add 10-15% to the cost of some current contracts with this cost falling either on the insurance business or the outsourcer, depending on the terms of the contract. The other effects of this devastating case, which reverses many significant UK cases over the last 10 years, will be discussed at our seminar on Tuesday 8 March at our Strand offices.
Welfare Services – Customs Concession Some businesses may be able to claim VAT refunds following Customs’ announcement that commercial providers of welfare services can charge VAT on their fees until their registration with the relevant national body for the regulation of care has been approved.
Education establishments – an uplifting opportunity? Some education establishments may be able to save VAT on new lifts. Customs have announced a policy change that means that educational establishments that install lifts to facilitate disabled access in buildings used for non-residential purposes (and not as day centres) for the disabled will only be able to get them VAT free if they contract for the work before 31 March 2005.
VAT on fuel – informal consultation Customs have issued an informal consultation on proposals to harmonise the VAT and direct tax scale rates for fuel based on CO2 emissions. Please speak with your usual VAT contact if you would like details of the consultation.
Local Authorities – opting to tax properties Customs have announced that public bodies (mainly local authorities) can ignore VAT refundable under their special VAT refund arrangement when they consider whether Customs’ permission is required prior to opting to tax a property.
VAT Frauds – more disruption for innocent businesses? Some businesses caught up in transaction chains involving a VAT fraud, however innocently, have suffered costs as a result of Customs’ efforts to stem VAT losses caused by these frauds, which often involve sales of mobile phones, computer chips and similar portable high value products. Customs frequently seek to recover VAT from such businesses and in the case of Teleos plc and others the Court of Appeal refused to require Customs to repay disputed VAT pending the outcome of the case before the ECJ, which is not expected before 2006. This may prompt Customs to take similarly aggressive action against other innocent businesses caught up in these frauds.
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