Although some uncertainty remains, from 1 April there will be fewer situations where HMRC accepts that early termination and compensation payments are not subject to VAT, write Katie Raine and Richard Woolich (DLA Piper).
Businesses have long treated early termination and compensation payments as outside the scope of VAT. In September 2020 serious doubt was cast on such treatment. Following the MEO (Case C-295/17) and Vodafone Portugal (Case C-43/19)CJEU cases HMRC published controversial and ill-thought through guidance (Revenue & Customs Brief 12/2020) accepting the principles of those cases but expanding them to wider circumstances changing its long-standing policy on the VAT treatment of early termination fees and compensation payments. Following many dissatisfied responses HMRC agreed in January 2021 to withdraw and replace this guidance. The replacement guidance has finally arrived (Revenue & Customs Brief 2/2022). HMRC’s revised position is much closer...
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Although some uncertainty remains, from 1 April there will be fewer situations where HMRC accepts that early termination and compensation payments are not subject to VAT, write Katie Raine and Richard Woolich (DLA Piper).
Businesses have long treated early termination and compensation payments as outside the scope of VAT. In September 2020 serious doubt was cast on such treatment. Following the MEO (Case C-295/17) and Vodafone Portugal (Case C-43/19)CJEU cases HMRC published controversial and ill-thought through guidance (Revenue & Customs Brief 12/2020) accepting the principles of those cases but expanding them to wider circumstances changing its long-standing policy on the VAT treatment of early termination fees and compensation payments. Following many dissatisfied responses HMRC agreed in January 2021 to withdraw and replace this guidance. The replacement guidance has finally arrived (Revenue & Customs Brief 2/2022). HMRC’s revised position is much closer...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
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