Case challenging UK rules on special investment funds goes to ECJ
The ECJ has now received the reference from the Tribunal in the case of JP Morgan Fleming Claverhouse Investment Trust & The Association of Investment Trust Companies. The appellants are challenging the UK law which limits exemption for the management of investment vehicles to the management of OEICs and authorised unit trusts and does not allow exemption for the management of investment trust companies. The case now joins the queue of cases waiting to be heard by the ECJ.
Property disposals – some taxpayers facing higher VAT costs?
The European Court has decided that the tax authorities can claw back VAT where a taxpayer has made a VAT free disposal of a capital asset followed by one subject to VAT. In answer to questions raised by the UK High Court, the ECJ has delivered a robust decision against the taxpayer in Centralan Properties Limited and some businesses may now be facing increased VAT costs.
Overseas businesses incurring UK VAT
Overseas businesses that incur VAT in the UK will be pleased to hear that HMRC have withdrawn their proposal to apply stricter rules to their VAT refund claims. It had been proposed that from 1 January 2006 all such claims would have to be supported by VAT invoices addressed to the claimant. HMRC have now confirmed that while they wish to encourage claimants to obtain invoices addressed to them, they will continue to accept claims based on invoices addressed to employees where it is normal business practice to invoice in this way. In practice, this is most likely to affect hotel bills.
Insurance outsourcing
Following the announcement in the Pre-Budget Report that the UK would be delaying the implementation of changes to its law to give effect to the ECJ’s decision in Andersen, we hear that the Irish authorities have also decided to defer changes to their laws. These developments may mean that insurers and outsourcers in the UK and Ireland should not face a succession of changes as the countries react to the ECJ decision and subsequently to any changes to EU law following the review of the VAT treatment of financial services being undertaken by the European Commission.
Local authorities – VAT on fuel
We understand that local authorities will be allowed until 1 April 2006 to implement procedures to ensure that VAT reclaimed on mileage allowance paid to staff is supported by garage receipts. New legislation coming into force on 1 January 2006 will require businesses that use mileage allowances to calculate the amount of VAT that they can reclaim on fuel purchases to obtain garage receipts from their staff to support the claims. Some local authorities were facing difficulties in agreeing new procedures and the delayed implementation of the new rules will enable them to put new processes into place.
This is the last issue of Weekly VAT News this year. The next issue will be for the week ending 6 January 2006. We wish all our readers a very happy Christmas and a peaceful and prosperous New Year.
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