Companies with overseas branches – no VAT on inter-branch services?

International companies will be pleased with the opinion of the ECJ’s Advocate-General in the case of FCE Bank, as it concurs with the UK’s practice of disregarding cross-border charges between branches of the same company. As long as the opinion(which has not been published in English) is followed by the ECJ businesses that have suffered VAT on inter-branch charges should be able to reverse the position and international companies will be reassured that they should not face such costs in the future.

Businesses with "Treasury" functions – outside the VAT regime?

The Tribunal’s decision in the case of Willis Pension Trustees Ltd that the pensions fund’s foreign exchange transactions did not involve any "supplies" for VAT purposes may also apply to businesses with "treasury" operations. We have now heard from HMRC that they do not intend to appeal against the Tribunal’s decision. Where VAT on costs relating to foreign exchange transactions (and, perhaps, some other types of financial transactions that support the core business operations) has been treated as irrecoverable, there may be scope to claim refunds.

Retrospective VAT claims?

There is still time to make protective claims for unclaimed VAT on expenses and for VAT overpaid on sales in VAT accounting periods when a repayment of VAT was due. On 13/14 October, the Court of Appeal is to consider whether the UK is still in breach of EU law because it has not provided proper transitional provisions dealing with the introduction of its "3 year cap".

Fuel for business cars

HMRC are continuing an informal consultation process on the proposal to reform the way that "scale charges", for calculating the VAT charge on fuel paid for by businesses but used for private motoring, are worked out. A range of options based around CO2 emissions is under consideration.

Businesses claiming refunds of EU VAT

Many businesses seeking refunds of VAT charged by EU suppliers find that their claims are refused by the tax authorities on the grounds that VAT should not have been charged in the first place. They are then left to try and recover the wrongly charged VAT from the suppliers concerned. The Italian Supreme Court has now asked the ECJ for a view on whether EU law permits local laws that deny businesses refunds of wrongly charged VAT.

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