Constable VAT Consultancy LLP

Download as PDF

Grant or Consideration?

The case of Groundwork Cheshire ("GC"), heard in September 2012, concerned the provision of environmental consultancy services to businesses.  The services were supplied at no cost to customers via GC's wholly owned trading company, Groundwork Environmental Services (Cheshire) Ltd ("Groundwork").

The First Tier Tax Tribunal (UK FTTT) recently issued its decision in the Groundwork Cheshire (GC) case.

This case, which was heard in September 2012, concerned the provision of environmental consultancy services to business.  The services were supplied at no cost to customers via GC's wholly owned trading company, Groundwork Environmental Services (Cheshire) Ltd (Groundwork).

Invoice Directive

The new EU Directive regarding VAT invoicing came into effect on 1 January 2013.  It puts electronic invoices on the same footing as paper invoices.  Although customers must agree to receive electronic invoices, Member States will no longer be able to set additional pre-conditions (for example, in the UK, for the use of advanced electronic signature and electronic data interchange).

Contract v. Behaviour

In an important case in terms of legal approach and, for the taxpayer sums involved, the Court of Appeal (CofA) has overturned the decision of an Upper Tribunal in the case of Secret Hotels (Medhotels).  The taxpayer believed that sales of hotel accommodation via its website or third party travel agents were outside the scope of VAT under the Tour Operators Margin Scheme (TOMS).  HMRC argued that UK VAT was due as the taxpayer, not the hotels, was acting as the principal in the transaction.