Retailers – Court of Appeal decision in "merchant charges" appeal

The Court of Appeal has decided that Debenhams should have accounted for VAT on the full amounts payable by customers using credit and debit cards, not just the amount left over after a payment to Debenhams’ card handling company. The Court found that the structure used by Debenhams (and some other retailers) since 2000 did not alter the contracts formed with retail customers.

Charities and education institutions – more VAT recovery on buildings?

Some charities, further education colleges and universities may be able to claim back more of the VAT paid on their buildings. The decision of the ECJ in P Charles and TS Charles-Tijmens suggests that changes to the UK law that were made in April 2003 and limited the ability of organisations that have a mixture of "business" and "non-business" activities to reclaim VAT on buildings and building work may not be permitted under EU law.

Retailers – low value imports

We hear that another retailer is transferring its internet sales operation to Guernsey so that it can sell low value consignments to UK customers without charging VAT.

Temporary Staff – Customs views to be challenged?

We hear that Customs’ view that employment agencies providing temporary staff should pay VAT on the full amount they charge (including wages, PAYE etc and commission) may be coming under challenge. Some businesses using temporary staff are facing increased VAT costs as a result of changes to the way payments for them are treated for VAT purposes,

VAT evasion - HMRC criticised by judge

HMRC have been heavily criticised over the collapse of case involving about £100 million of fraudulent VAT claims. According to the judge, the court was "told what witnesses think the court should know, not frankly what is actually the truth" and that "there was a lack of frankness towards prosecuting counsel and therefore towards the Defence and the Court". With considerable regret, the judge decided that it would not be fair to try the defendants in the case. Hopefully, Customs will learn from their past errors and will be more successful in future prosecutions of this kind

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