One minute with Zizhen Yang, barrister at Pump Court Tax Chambers.
What’s keeping you busy at work?
Some VAT cases concerning the interaction between the time of supply rules and the VAT group regime, the identity of the recipient of a supply for input tax recovery purposes, the existence of a fixed establishment and the scope of HMRC’s ‘protection of the revenue’ power in the VAT group context. Also some landfill tax cases where HMRC has alleged that waste was deposited without the requisite permission, or falls outside the scope of an exemption.
Away from indirect tax, I am looking at some CGT issues, including whether a share sale gave rise to a contingent liability the value of which should be taken into account in calculating the chargeable gain arising to the seller, and whether certain repayments of capital fall within the transactions in securities regime.
If you could make one change to tax, what would it be?
This may not be an answer that meets the question precisely, but I believe passionately that legal education should form part of the basic school curriculum. Everyone should have a solid understanding of their fundamental legal rights and obligations and know how, broadly, the legal system works when things go wrong. Everyone should know how to challenge public bodies when they act irrationally, illegally or unfairly. This very much includes tax and HMRC.
What do you know now that you wish you’d known at the start of your career?
That whilst ‘knowing’ a lot of legislation and case law is doubtlessly important and makes practice more efficient, often what ‘wins’ a case is thinking deeply about purpose and fairness.
Also, that it is OK sometimes to conclude that your leader, or a judge, is wrong. Just make sure to have done your research beforehand.
Has a recent tax case caught your eye?
I was reading the opinion of Advocate-General Medina in Norddeutsche (Case C-141/20), delivered on 13 January 2022. It suggests that the effect of the single taxable person treatment in the Principal VAT Directive, which underlies the VAT grouping regime in the UK, is limited to allowing group companies to file a single consolidated VAT return, and that the disregarding of intra-group supplies is based on the fact that those supplies are made at cost.
Whilst that was the case in the example given in the opinion, the assumption that intra-group supplies are made at cost will not always be borne out in practice. If the opinion is right, therefore, it could cut right across a fundamental aspect of the single taxable person treatment, meaning that intra-group supplies that are not made at cost, or that involve partial exemption considerations, will potentially have VAT consequences. That will have serious practical impact for VAT groups. I hope the CJEU will clarify and correct the position when it issues its judgment.
What should we look out for this year?
HMRC seems to be mounting an ever-increasing number of challenges to landfill site operators. The law was changed in 2018 to bring more landfill activities within the scope of the tax and to overcome the vestigial effect of the WRG decision ([2008] EWCA Civ 849), which HMRC seemed to accept at the time as meaning that no tax would be charged on material ‘used’ on a landfill site. Nevertheless, HMRC remains keen to recover tax from landowners on what appears, sometimes, to be dubious bases.
The VAT grouping regime remains an area frequented by opacity and dispute. Even the CJEU and the advocates general cannot seem to agree on the intended effect of the ‘single taxable person’ treatment. The Upper Tribunal will provide valuable guidance when it decides Prudential, hopefully to be heard later this year, on the intended effect of disregarding group supplies when the actual transaction took place intra-group but it is alleged that a deeming provision treats the time of supply as falling outside of the group period.
You might not know this about me but...
I have degrees in immunology and creative writing.
One minute with Zizhen Yang, barrister at Pump Court Tax Chambers.
What’s keeping you busy at work?
Some VAT cases concerning the interaction between the time of supply rules and the VAT group regime, the identity of the recipient of a supply for input tax recovery purposes, the existence of a fixed establishment and the scope of HMRC’s ‘protection of the revenue’ power in the VAT group context. Also some landfill tax cases where HMRC has alleged that waste was deposited without the requisite permission, or falls outside the scope of an exemption.
Away from indirect tax, I am looking at some CGT issues, including whether a share sale gave rise to a contingent liability the value of which should be taken into account in calculating the chargeable gain arising to the seller, and whether certain repayments of capital fall within the transactions in securities regime.
If you could make one change to tax, what would it be?
This may not be an answer that meets the question precisely, but I believe passionately that legal education should form part of the basic school curriculum. Everyone should have a solid understanding of their fundamental legal rights and obligations and know how, broadly, the legal system works when things go wrong. Everyone should know how to challenge public bodies when they act irrationally, illegally or unfairly. This very much includes tax and HMRC.
What do you know now that you wish you’d known at the start of your career?
That whilst ‘knowing’ a lot of legislation and case law is doubtlessly important and makes practice more efficient, often what ‘wins’ a case is thinking deeply about purpose and fairness.
Also, that it is OK sometimes to conclude that your leader, or a judge, is wrong. Just make sure to have done your research beforehand.
Has a recent tax case caught your eye?
I was reading the opinion of Advocate-General Medina in Norddeutsche (Case C-141/20), delivered on 13 January 2022. It suggests that the effect of the single taxable person treatment in the Principal VAT Directive, which underlies the VAT grouping regime in the UK, is limited to allowing group companies to file a single consolidated VAT return, and that the disregarding of intra-group supplies is based on the fact that those supplies are made at cost.
Whilst that was the case in the example given in the opinion, the assumption that intra-group supplies are made at cost will not always be borne out in practice. If the opinion is right, therefore, it could cut right across a fundamental aspect of the single taxable person treatment, meaning that intra-group supplies that are not made at cost, or that involve partial exemption considerations, will potentially have VAT consequences. That will have serious practical impact for VAT groups. I hope the CJEU will clarify and correct the position when it issues its judgment.
What should we look out for this year?
HMRC seems to be mounting an ever-increasing number of challenges to landfill site operators. The law was changed in 2018 to bring more landfill activities within the scope of the tax and to overcome the vestigial effect of the WRG decision ([2008] EWCA Civ 849), which HMRC seemed to accept at the time as meaning that no tax would be charged on material ‘used’ on a landfill site. Nevertheless, HMRC remains keen to recover tax from landowners on what appears, sometimes, to be dubious bases.
The VAT grouping regime remains an area frequented by opacity and dispute. Even the CJEU and the advocates general cannot seem to agree on the intended effect of the ‘single taxable person’ treatment. The Upper Tribunal will provide valuable guidance when it decides Prudential, hopefully to be heard later this year, on the intended effect of disregarding group supplies when the actual transaction took place intra-group but it is alleged that a deeming provision treats the time of supply as falling outside of the group period.
You might not know this about me but...
I have degrees in immunology and creative writing.
