Investment Management ruling awaited
Businesses that manage Authorised Unit Trusts and Open Ended Investment Companies should be aware that the Advocate General’s opinion in Abbey National Plc is due out on 8th September. This follows an earlier Abbey National case that demonstrated that the sub-contracted investment management of Unit Trusts and OEICs is VAT free. The current case, heard by the ECJ on 10 March, is seeking similar treatment for sub-contracted trustee, depositary and administrative services.
HMRC Public Service Agreement
HMRC have recently published their Public Service Agreement (PSA) outlining their key objectives for the period 2005-08. For VAT, their main objective is to reduce VAT losses to no more than 11% of the ‘theoretical liability’. For the period 2003-04 the VAT gap (i.e. the scale of VAT losses) was estimated to be 12.8% and as such, if HMRC are to reach their new target it is likely that they will take a more aggressive approach in countering VAT avoidance, which they say is one of the main reasons for the VAT gap. Additionally, another objective of the PSA is to increase to 50% the number of VAT returns filed via the internet.
HMRC take closer look at Transfer Pricing
We understand that businesses may be coming under increased scrutiny from HMRC in relation to their Transfer Pricing methodology. Even corporate groups that have all their companies in one ‘VAT group’ may need to consider carefully any UK to UK transfer pricing implications as the way they calculate the VAT they recover on costs may come under challenge.
HMRC seek permission to appeal Bookit decision
HMRC have decided to seek permission to appeal (to the Court of Appeal) a recent High Court decision which ruled that separate card handling fees to customers are exempt. The case, taken by Deloitte, involved card handling fees charged by a booking centre to cinema-goers who purchased their tickets over the telephone or over the internet. Customs argued that VAT was due on the fee but the High Court disagreed and decided that the charge was not subject to VAT.
MG Rover helpline closes
HMRC have announced the closure of the debt management helpline set up to help businesses affected by the collapse of MG Rover. Anyone calling that number will be put in contact with their local HMRC office. The team which was dealing with these calls will continue working on existing cases and will be available to advise local debt management teams.
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