- in European Union
International businesses using overseas consultants – VAT refunds?
Some international businesses that use consultants based overseas may be in line for VAT refunds, following the Tribunal’s decision in Zurich Insurance Company. The Tribunal decided that Zurich’s UK branch did not have to pay VAT on the charges made by Swiss consultants working on a world wide project under a contract with its Swiss head office. Customs argued that since the cost of the work was met by the UK branch, it should pay VAT on it. We understand that Customs have not yet decided whether to appeal the decision.
Energy traders – Enron Tribunal decision
Some businesses that traded with Enron before it went into administration in November 2001 may need to revisit the VAT treatment of transactions with Enron, following the Tribunal’s decision in Enron Europe Limited. The Tribunal decided that Enron’s administrators were correct to account for VAT only on the cash received following the termination of contracts as a result of the administration. Customs had argued that VAT was due on the total outstanding balances.
Business Sales – further consultation by Customs
Customs have published a summary of responses to the 2000 consultation about VAT-free transfers of businesses as going concerns. It announces a further consultation on matters arising since then, with responses requested by 31 October 2005.
Charities – VAT on newsletters and fundraising costs
Many charities may be able to claim refunds of VAT on the cost of producing newsletters sent to donors, following the High Court’s decision in Church of England Children’s Society. The High Court also indicated that at least some of the VAT charged by fundraisers may be recoverable but this aspect of the case may have to be considered by the Tribunal, if Customs and the Society cannot agree how much of the VAT can be reclaimed.
Property – no harmonisation of VAT on construction and refurbishment
Pleas for alignment of the VAT treatment of new build and refurbishment work seem to have been given short shrift by the Office of the Deputy Prime Minister. We hear that their response to a select committee report on demolition in the north confirmed that there are no plans to harmonise new build and refurbishment work.
Less VAT on Condoms?
The Treasury is reported to be considering a reduction (to 5%) in the VAT charged on condoms, following recent lobbying (including the delivery of a truckload of condoms to the Treasury). An announcement is expected "as part of the normal budget process".
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