UK: Deloitte weekly VAT News - Week ended 25 March 2005

"Takeaway" food – less VAT free sales?

Businesses selling food and drink to "captive" customers may have to pay VAT on their sales unless they can provide evidence that customers have consumed the products away from their premises. In the case of Costa Ltd, a subsidiary of Whitbread PLC, the High Court decided that any food and drink purchased in an airport departure lounge could not be treated as VAT-free take-away food unless there was evidence to show that sandwiches, etc had been taken away for consumption on board aircraft. Please speak with your usual Deloitte contact for further information.

Following on from a similar decision in Bookit Ltd by the Tribunal in England and Wales, the Scottish Tribunal has ruled, in the case of SECC, that the passing of debit or credit card information which "triggers" a payment is not an activity sufficient to be treated as that of an intermediary or as a negotiation service. This decision may result in a narrowing of the definition of an intermediary and may affect any business that charges a separate debit or credit card handling fee..

Customs have published Business Brief 07/05 to clarify the changes affecting special partial exemption methods announced in the 2005 Budget. The changes, which are due to come into effect on 1 April 2005, specify how VAT incurred on purchases that are not dealt with fully in the special method should be recovered and confirm that a business seeking to operate a special method must seek and receive permission from Customs in writing before operating such a method. Please speak with your usual Deloitte contact for further information.

Businesses with operations in France or Spain where VAT recoveries have been restricted because they have received subsidies may be able to reclaim additional VAT if the ECJ follows its Advocate General’s opinion in two cases brought by the European Commission. In both cases, the A-G suggests that the restrictions conflict with EU law. For further information, please speak with your usual Deloitte contact.

The ECJ’s Advocate General is due to issue his delayed opinion in the Halifax, BUPA and University of Huddersfield cases on VAT avoidance on 7 April and we will be holding a seminar to discuss it on 8 April.

A consultation on the powers of the merged HM Revenue and Customs department has begun, with comments sought by 13 June. Concerns have already been expressed about the "crossover" of powers in the merged department leading to greater burdens on business.

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