A busy week in UK VAT

It’s been a busy week for UK VAT consultants. H M Revenue & Customs (HMRC) have issued two new Revenue & Customs Briefs and several consultation documents. In addition there have been a number of judgments released by the European Court of Justice (ECJ).

First the two Revenue & Customs Briefs

Smoking cessation products

From 1 July smoking cessation products sold over the counter will be liable to VAT at the reduced rate of 5%, instead of the standard rate of 17.5%. This reduced rate will last for a year. See Revenue & Customs Brief

Supply and installation of mobility aids in elderly persons’ homes

Also from 1 July 2007 the reduced rate will apply to certain goods supplied and installed in the homes of people aged 60 or more. This also applies where the person shares their home with friends or family. The relief is not available for care homes.

It will be necessary to give a declaration of eligibility.

ECJ Judgments

This week the ECJ issued four Judgments in the following cases:

T-Mobile, 3G and others in Austria; Hutchison and others in the UK; JP Morgan Claverhouse; and Planzer Luxembourg Sàrl

Telecoms

The T-Mobile and Hutchison cases dealt with whether there was any VAT to recover on the licence fees paid by the mobile phone companies for licences to operate 3G services. The ECJ ruled that the Governments were not carrying on economic activities so there could be no liability to VAT. There was a lot of money at stake in these cases otherwise there doesn’t seem to have been any good reason for the companies to have pursued the issue this far. It came as no surprise that the ECJ ruled as it did.

Insurance

The JP Morgan Claverhouse Judgment has pleased many involved in the insurance industry in the UK. It has made it clear that in many cases certain types of business can be exempt from VAT, although HMRC have long argued that they should be standard rated. Not wanting to bore you I’ll refrain from expounding on the finer points of the case here.

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