Country-specific updates: UK

UK’s First Tier Tribunal (FTT) in the case of BMW Shipping Agents Ltd. [2022] UKFTT 335 (TC), has held the customs agents liable for paying import VAT, because the declarations were made in the name of the customs agents (rather than the importer).

Details

BMW Shipping Agents Ltd. (BMW) in the UK was engaged by an overseas seller that was not established or registered for VAT in the UK, to arrange for goods be Customs cleared in the UK and forwarded on to VAT registered businesses in other EU countries.

BMW never owned the goods, and was therefore not entitled to claim Onward supply relief for import VAT, which it had incorrectly claimed while filing the Customs declarations. As a result, a post clearance demand note was issued to BMW for paying import VAT of over GBP3 million in 2016. BMW appealed against that demand. The dispute was whether BMW or the overseas seller were liable for the import VAT.

The UK FTT decided that the decision as to the person liable to pay import VAT, had to be based on the details entered on the Customs declarations. The Customs declarations indicated that BMW Agents filed the declarations in its own name and identified itself as the importer (instead of the overseas seller). As such, BMW was held liable to pay the import VAT and the FTT dismissed the company’s appeal.

Comments

Although the facts happened before Brexit, the principle of this decision is even more relevant post Brexit. This case highlights the importance of ensuring that the declarations are filed correctly as a mistake / lack of care can result in an import VAT liability (even for Customs agents) that would otherwise not be due.

Cancellation of the proposed digital VAT-free retail scheme for overseas visitors

The new Chancellor of The Exchequer in the UK, announced ‘a reversal of almost all of the tax measures set out in The Growth Plan 2022 that have not been legislated for in parliament.’ This includes the cancellation of the proposed digital VAT-free retail scheme for overseas visitors. For details regarding the original proposition for the digital VAT-free retail scheme in The Growth Plan 2022, please refer to the link here.

HMRC has published a new guidance on secondary liability and joint and several liability for plastic packaging tax

Details

HMRC has published a new guidance to explain what secondary liability and joint and several liability means in the context of plastic packaging tax, under respectively Parts 1 and 2 of Schedule 9 to the Finance Act 2021.

Under those provisions, a business may be held liable by HMRC for unpaid plastic packaging tax due by another person or be held jointly and severally liable for future tax due by another person. The guidance sets out, for each type of liability:

• when secondary or joint and several liability can arise;
• how HMRC assesses liability and determine the amount due;
• when HMRC can issue a notice: and
• the recourse mechanism against a notice issued by HMRC.

Comments

For more information regarding plastic packaging tax in the UK, the risk of Secondary or Joint and Several Liability and how you can mitigate that risk, please refer to our previous article here.

Upper Tribunal has decided in Northumbria Healthcare NHS Foundation Trust [2022] UKUT 00267 that NHS Trust was not engaging in supply of car parking under a special legal regime

Details

The issue in this case was whether a supplier was acting as a taxable person when renting out parking space in its hospitals’ car parks. The taxpayer had claimed that it was acting as a public authority pursuant to article 13 PVD (as implemented by section 41A VATA). The Upper Tribunal had therefore to decide:

• whether the supplies of parking spots were made pursuant to a ‘special legal regime’ applicable to the taxpayer and not applicable to private economic operators; and, if so
• whether treating the taxpayer as a non-taxable person would lead to a significant distortion of competition.

The Upper Tribunal found that there was no error of law in the First-tier Tribunal’s finding that the taxpayer did not provide parking place under a special legal regime. Furthermore, although this was not determinative for this appeal, the Upper Tribunal considered that the First-tier Tribunal had not erred in concluding that treating the taxpayer as non-taxable would lead to a significant distortion of competition.