Constable VAT Focus 22 November 2022


VAT domestic reverse charge technical guide
The above guidance provides technical information about the VAT reverse charge that may apply if you buy or sell building and construction services. HMRC has recently added a new section on scaffolding and also updated the content with guidance on the following:

  • Reverse charge exemption for end users and intermediary suppliers
  • How to tell the difference between ‘labour-only’ supplies of construction services and supplies of workers by employment businesses
  • Accounting for VAT where you supply or receive construction services together with other goods or services
  • Accounting for VAT on the hire, erection and dismantling of scaffolding
  • How the reverse charge affects supplies made by and to utility companies and how non-established taxable persons should account for VAT on construction services.

HMRC is holding a live webinar at 11.45 on 24 November 2022 for businesses operating in this sector and interested parties can register here. The webinar is stated to cover:

  • when to apply the VAT reverse charge
  • how to show the reverse charge on your invoices
  • how the reverse charge may affect your business
  • how to account for the reverse charge on your VAT return
  • what to do if you make a mistake when applying the reverse charge

Fuel and Power (VAT Notice 701/19)
HMRC has recently updated section 2 of this notice to include information about the VAT liability of payments made under the energy bills support schemes including the following:

  • The Energy Bill Relief Scheme
  • The Energy Price Guarantee
  • The Energy Bills Support Scheme

Payments made by the Government to energy suppliers under the Energy Bill Relief Scheme and the Energy Price Guarantee are grant payments and are outside the scope of VAT.

The Energy Bill Support Scheme is a payment made to the domestic users of fuel and power to support paying their bills. Energy suppliers are required to account for VAT under the normal rules as the payment is made for a taxable supply of energy and the value of that supply is not reduced as a result of the payment made under the scheme.

With respect to all three schemes, there will be no direct impact on the input VAT recovery as HMRC confirms that any VAT incurred by suppliers in relation to the operation of the schemes relates to the taxable supply of energy and is therefore recoverable subject to the normal rules.

Fulfilment House Due Diligence Scheme registered businesses list
Traders based outside of the UK can use the above list to check if the business that stores its goods in the UK is registered with the Fulfilment House Due Diligence Scheme. The Fulfilment House Due Diligence Scheme registered businesses list has been updated with 6 additions and 1 amendment.

Processing option to tax notifications

HMRC is currently undertaking a consultation on ceasing the issue of an Option to Tax (OTT) notification receipt letter. As it is the responsibility of the opter to correctly notify HMRC, it is now proposed by HMRC that where a taxpayer submits a VAT1614A  by any means other than email, they will not receive a response. In the case of email, an automated email response will be provided.

In addition, HMRC also propose ceasing the processing of requests to confirm the existence of an OTT on land and buildings. HMRC states that the existence of an OTT forms part of a business’s records and should be kept for at least 6 years. Under the proposed changes, there will be two situations where HMRC will check to see if there is any record of an OTT. These are as follows:

  • The effective opted date is likely to be over 6 years ago, or
  • The person requesting the confirmation has been appointed as a Land and Property Act Receiver, or an Insolvency Practitioner to administer the property in question.

HMRC has stated that it will consider feedback on this consultation before proceeding with and communicating the changes.

Comments can be sent to HMRC by close of business 28 November 2022 using the email address


The Chancellor announced the Autumn Statement 2022 on 17 November . You can read the detail on the VAT items in that statement on our website.



Since the end of the transitional period on 31 December 2020 European Court judgements are not binding on the UK in most cases. However, it is expected that UK courts will still take these judgements into consideration and there may be occasions where they have a more binding effect.

1. Employee Reward Scheme vouchers

This case concerns a dispute between GE Aircraft Engine Services Ltd (GAES) and HMRC, regarding the VAT liability of retail vouchers awarded by GAES to its employees. GAES operates an award scheme known as ‘Above & Beyond’ to reward the most deserving and high performing employees. Under this scheme, an employee nominated for an award ranked at an intermediate level was offered retail vouchers.

The UK VAT legislation states that where a taxable person puts services to any private use or for a purpose other than a purpose of the business, the taxable person shall be treated as making a deemed supply and therefore account for VAT.

GAES was subject to VAT assessments raised by HMRC on the grounds that the retail vouchers are provided to employees free of charge and for personal use outside GAES’s commercial activity. HMRC stated that the fact that GAES has a business purpose for awarding the retail vouchers is irrelevant. As a result, HMRC concluded that the vouchers are subject to VAT.

GAES argued that the award of the retail vouchers to employees under the scheme does not constitute a taxable supply because that programme is linked to the economic activities of that company and the resulting advantage for the employees is secondary. A distinction must be drawn between the economic aim pursued by that company and the private use made of them by employees.

The referring court asked the CJEU whether the VAT directive must be interpreted as meaning that a supply of services consisting, for a business, in offering retail vouchers to its employees, as part of a programme set up by that company, intended to recognise and reward the most deserving and high-performing employees, falls within its scope and therefore subject to VAT.

The CJEU concluded that the scheme was designed with the aim of improving the performance of its employees and, therefore, of contributing to better profitability of the business. The scheme was dictated by the pursuit of additional profits and the resulting advantage for employees were merely incidental to the needs of the business. As a result, the provision of free retail vouchers to employees were not subject to a deemed supply of VAT.

Constable Comment: This case considered whether the provision of free retail vouchers to employees would be considered as private use or other than for business purposes, and it was concluded that where the main purpose of the scheme is to increase business efficiency and profits, there is no private use and therefore a deemed supply cannot arise.

Also, it is worth noting that this was an interesting decision in the sense that the CJEU no longer has jurisdiction to give rulings on requests from UK Tribunals unless the request was made before the end of the Brexit transition period, as was the position in this case.

Please note that this newsletter is intended to provide a general overview of the subject. No liability is accepted for the opinions it contains or for any errors or omissions. Constable VAT cannot accept responsibility for loss incurred by any person, company or entity as a result of acting, or failing to act, on any material in this blog post. Specialist VAT advice should always be sought in relation to your particular circumstance.