Constable VAT Focus 27 August 2020


Check When You Can Account for Import VAT on Your VAT Return
HMRC has updated its guidance. If you are a UK VAT-registered business, find out when you can, or need to, account for import VAT on your VAT Return (also called postponed VAT accounting) from 1 January 2021 onwards

VAT Notice 700/11: Cancelling VAT Registration
Details on how to cancel a VAT registration online have been updated in this Public Notice.

Revenue & Customs Brief 8 (2020): Change to Partial Exemption VAT Treatment
Following the legal judgment C-153/17 Volkswagen Financial Services (UK) Ltd this brief explains HMRC’s suggested method for apportionment of VAT incurred on overheads by businesses who supply goods by way of hire purchase agreements. HMRC have updated the calculation under the heading ‘HMRC position’ to confirm that where the amount of credit is less than the total value of the asset, then both the amount shown as value of the asset and value of the exempt credit would be reduced.

Changes to VAT MOSS Rates
From 1 September 2020 until 28 February 2021, Ireland will be reducing their standard VAT rate from 23% to 21%. HMRC has updated its guidance to reflect this change.

The Value Added Tax (Refund of Tax to Museums and Galleries (Amendment) Order 2020
HMRC have opened a consultation on draft legislation which lists additions and changes to the list of museums and galleries which are allowed to reclaim VAT. This consultation gives an opportunity for those museums and galleries affected to check that the proposed changes and additions are correct. The consultation closes on 15 September 2020.


We have recently released a blog entitled “Does the Temporary Reduced Rate Apply to Me?” This piece discusses the way in which the temporary reduced rate of VAT interacts with supplies of food and beverages and aims to assist taxpayers in identifying the key points to consider. To discuss the temporary reduced rate and how it may impact on your business, please do not hesitate to contact Constable VAT.

Read the piece in full here.


We have not seen as many cases as usual recently as the CJEU is currently on its summer break which lasts from 16 July until 31 August. The amount of decisions issued by the UK Court and Tribunal system has also slowed down recently given the difficulties with hearings and the coronavirus outbreak.

First Tier Tribunal

1. Smart Organiser Limited

Smart Organiser Limited (SOL) is a UK based company which describes itself as an employment agency which provides temporary workers alongside accounting, book-keeping and tax services. In this case, SOL appeal against HMRC’s decision to disallow input VAT totalling £110,529.08.

SOL was involved in the refurbishment of several properties. At the start of these projects, SOL had been dealing with 47 different entities which were providing various workers to the different refurbishments. As this became impractical, three intermediate companies were set up to manage the various subcontractors.

These three companies invoiced SOL for supplies of workers, charging VAT on invoices raised and SOL sought to recover the VAT amount charged as input VAT. HMRC denied this claim on the grounds that the intermediate companies were not making supplies to SOL, contending that supplies were made by the subcontractor workers themselves directly to SOL. In addition, SOL paid the workers directly as the intermediate companies had no bank accounts. As these workers were registered as sub-contractors, they are not capable of making supplies of staff but could (under rules relating to the CIS scheme) only provide their services as employees.

HMRC argued that the amounts charged as VAT on the invoices raised by the intermediate company were not actually VAT as the supply was not one that those companies could legally make and as a result they were not entitled to raise VAT invoices and SOL was not entitled to reclaim amounts shown as VAT on these invoices.

The Tribunal considered that the evidence which was provided was not sufficient to uphold SOL’s appeal, concluding that there was no evidence to suggest that, in substance, supplies of staff were made by any of the intermediate companies to SOL. The appeal was dismissed.

Constable Comment: This appeal considered the case of Genius Holdings. Whilst the facts of these cases are different, the principle established in Genius Holdings is that a claim for input tax must be on the basis of a substantive supply having been made, not merely on the basis of VAT having been shown on an invoice. Any companies in the construction sector which operate similar models should review their positions and seek professional advice if there are any concerns.

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.