Constable VAT Focus 23 April 2020


EC Sales List: Service Issues & Availability
HMRC has announced that the online EC Sales List service will be down 6pm to 11:45pm on Tuesday 28 April 2020.

Health Professionals & Pharmaceutical Products
HMRC has updated its guidance to include EEA health professionals in the list of relevant practitioners.

Call Off Stock: Draft Legislation
HMRC has published draft legislation and an updated policy paper on the changes to the rules for call off stock arrangements between the UK and the EU. The legislation has a retrospective element. This means that businesses are able to take advantage of the new arrangements from 1 January 2020 and are required to correct returns where this has not been done.

Road Fuel Scale Charges
The VAT road fuel scale charges are amended with effect from 1 May 2020. Businesses must use the new scales from the start of the next prescribed accounting period beginning on or after 1 May 2020.


The FTT has issued directions for a further general stay in relation to cases which the Tribunal received prior to issuing an initial stay on proceedings on 24 March. Those cases which were assigned to the standard or complex categories have been further stayed up to and including 30 June and the dates of all hearing windows and for compliance with all time limits in those proceedings have been further extended by 70 days. The full Directions can be read here.


We have recently released our coverage of some of the most recent VAT developments and decisions which may be of particular interest to those operating in the third sector and can be read here.

In addition, we released a new newsletter covering the DIY Housebuilder VAT refund scheme. The special VAT Refund Scheme allows DIY housebuilders and people converting non-residential buildings into dwellings to reclaim VAT incurred on construction or conversion costs. This scheme is available when the building will be used for a non-business purpose. This can be read here.

In relation to DIY housebuilder claims, we have recently been advised by HMRC that due to the Covid-19 crisis, HMRC is currently unable to carry out the detailed review of invoices submitted with claims within its usual timescales. As a result, in some cases, HMRC is confirming the claimant’s basic entitlement to make a claim and initially repaying 70% of the value of the claim.  The balance of the claim will be paid once HMRC is able to check the supporting tax invoices and fully verify the amount. HMRC is unable to give a timescale on when it will be able to conduct full checks and repay the remaining 30% of claims but it is trying to restructure its operations to expedite verification checks However, it has also clarified that it will continue to carry out full checks before making payments on high value claims. We will keep readers informed via future newsletters and our website.


Upper Tribunal

1. Done Brothers and Rank: VAT Liability of FOBTs

This appeal by HMRC concerned the VAT liability of supplies to retail customers of the ability to play various games of chance on gaming machines. It appeals against the decisions in The Rank Group and Done Brothers. Whilst these cases are not identical, the appeal at hand relates to a single issue which is common to both and the parties had requested a single judgement,

The background to this long running matter was a change in UK law which took place in December 2005; the supply of gambling by means of a fixed odds betting terminal (FOBT) was changed from exempt to standard rated for VAT. The effect of this change was that identical games, such as roulette, when played using different mediums, attracted different rates of VAT. Rank reclaimed the output tax which it paid on these supplies on the grounds that the UK position infringed the EU principle of fiscal neutrality. This position was upheld in the CJEU and UK Supreme Court.

As a result of Rank, the UK law was changed in 2013 to affirm supplies of gambling through FOBTs as VAT exempt. Done claimed repayment of VAT which it had paid on FOBT supplies between 2005 and 2013 on the same grounds as in Rank, that the UK law during the relevant period had infringed the EU principle of fiscal neutrality. HMRC refused this repayment and the taxpayer appealed. Done Brothers were successful in the First Tier Tribunal, which considered that the principle of fiscal neutrality had been breached, upholding the position in Rank. It held that the average consumer viewed the game on the various platforms as similar and interchangeable and that supplies from FOBTs were VAT exempt.

HMRC appeal broadly against this position, alleging that the FTT had failed to accurately consider the characteristics of an average consumer of gambling services. The UT were rather disparaging of HMRC’s appeal, noting that “… the sand of HMRC’s argument had begun to shift…” and “the skeleton argument contained no assertion or discussion as to which “characteristics” of the average consumer in these appeals should have been considered and determined by the FTT”.

It was clarified that HMRC alleged that the FTT had erred in the way in which it had determined the needs of the average consumer, as it had considered evidence which showed average behaviour without also considering evidence as to the possible preferences of different consumers. It noted that FOBTs were perceived differently by consumers as they provide the opportunity to place higher bets than other machines. It argued, in essence, that data on average use of the machines was misleading as the average consumer may value the ability to place a higher bet and would change between machines depending on how much they felt like wagering.

Done Brothers argued that there was nothing in any of the authorities, including those cited by HMRC, to support HMRC’s contention that the Tribunal needs to consider the reasoning underlying the behaviour of an average consumer. The Tribunal confirmed this point, noting that the FTT does not need to consider the reasons and possible preferences of individual consumers.

The Tribunal held in favour of the taxpayer, dismissing HMRC’s appeal.

Constable Comment: This decision is the most recent in a long-running debate between HMRC and the taxpayer around the correct VAT liability of supplies of gambling made through FOBTs. Readers who have an interest in EU law may wish to  read the entire judgment as it offers discussion of the way in which issues of fiscal neutrality should be considered by the Courts.

This newsletter is intended as a general guide to current VAT issues and is not intended to be a comprehensive statement of the law. 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 newsletter. Specialist VAT advice should always be sought in relation to your particular circumstance.