CTG Newsletter – 4 January 2017
Happy New Year to all CTG members! We look forward to working with you in 2017.
European Commission consultation on VAT rate reform
In April 2016, the European Commission (EC) adopted its Action Plan on VAT. The EC has now opened a public consultation (which closes on 20 March 2017) considering two broad options for the reform of the VAT rate system:
- The first option would keep the standard VAT rate of 15% and regularly update the list of goods and services eligible for reduced rates, on the basis of Member States suggestions. The main aim of this option is to protect the harmonisation of the VAT system, but also to allow it to adapt to changing circumstances.
- The second option would remove the minimum rate of 15% and abolish the list of reduced and zero rates, thus granting greater discretion for Member States in fixing their own VAT rates. The main aim of this option is to increase the flexibility of the VAT system, and to allow EU Member States to implement a VAT system that is adapted to their situation.
Under both options, all currently existing reduced rates and derogations would be maintained and made available to all Member States, ensuring equal treatment. Further information is available here.
Brexit notwithstanding, it is crucial that the voice of the charity sector is heard. Whether or not the UK remains an EU Member State when these proposals are put into action, they will certainly come to bear when considering our future relationship with the EU.
VAT126 form updated
Updates have been made to the ‘Type of body’ and ‘Declaration’ sections of the VAT126 form. The VAT126 is used by certain bodies who are not registered for VAT, in order to claim back VAT. This includes local authorities and similar bodies, academies, certain charities and non-departmental bodies or similar public bodies. Further information is available here.
New £1 coin
The Chief Secretary to the Treasury has announced that the new £1 coin will enter circulation on 28 March 2017. With three months to go, the Government has launched a campaign to help raise awareness and encourage the public to return the round £1 coins. Further information is available here.
OTS letters to Government
The Office of Tax Simplification (OTS) has published letters sent to Financial Secretary to the Treasury and to Chancellor of the Exchequer outlining how the OTS intends to make progress on a number of issues, including Making Tax Digital and proposals relating to the alignment of income tax and NICs. Further information is available here.
Brockenhurst College VAT case
Advocate General Kokott has published an opinion in the Brockenhurst College VAT case (C-699/15). The case is a UK referral from the Court of Appeal asking whether supplies of restaurant and entertainment services made by an educational establishment to paying members of the public (who are not recipients of the principal supply of education) are ‘closely related’ to the provision of education and, therefore, exempt from VAT under EU law (Article 132(1)(i) of the VAT Directive), in circumstances where the making of those supplies is facilitated by the students (who are the recipients of the principal supply of education) in the course of their education and as an essential part of their education. The AG concluded (in line with HMRC’s interpretation) that closely related transactions within the meaning of Article 132(1) of the VAT Directive are independent supplies, the taxation of which also increases the cost of access to supplies that as such are exempt from tax. While AG opinions can be very persuasive we await for full judgment of the CJEU before commenting further on the potential implications for charities. Further information is available here.
Scottish Government plans for Apprenticeship Levy
The Scottish Government has published a report setting out how it intends to use the funds generated for it by the UK-wide Apprenticeship Levy. Further information is available here.
Consultations tracker
CTG will be considering responding to a number of important consultations over the next few months. Our consultation responses rely on input from members and we would encourage you to send us your thoughts, and where relevant submit your own consultation response. The deadlines for forthcoming consultations are outlined below. Please send your feedback via the relevant consultation page on the CTG website or to info@charitytaxgroup.org.uk.
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