Michaela Merz


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UK: Only the owner of the imported goods can deduct the import VAT as from 15 of July 2019


HMRC is aware of incorrect treatment by businesses whereby import VAT has been incorrectly deducted as input tax by non-owners of the goods.  As from 15th July 2019, HMRC will only allow claims for input VAT deduction if the owner is the importer and pays the UK import VAT. In case the non-owner is the importer and pays the UK import VAT, HMRC will not allow an input VAT deduction. A transitional period to 15th July 2019 has been put in place for businesses to make any necessary changes and implement correct procedures. This is especially important for toll manufacturer, who are acting as importer and recover the import VAT paid. These toll manufacturer does not own the goods.

Toll operators  import goods, process them and distribute them within or outside of the UK but to other EU countries (for instance for clinical trials). The toll operator does not take ownership of the goods and does not resell them. The only supply by the toll operator is of its services to its client not resident and not registered for VAT in UK (the owner of the imported goods).

Title to the goods at all times remains with the owners. However, the toll operator acts as ‘importer of record’ on UK import declarations, pays the import VAT to HMRC and receives the import VAT certificate (C79). HMRC has become aware that a number of UK toll operators who have paid import VAT on behalf of their not resident and not VAT  registered customers have also claimed a corresponding deduction for input tax under section 24 of the VAT Act 1994. However, there is no provision in UK law for such deduction.

There is no evidence to suggest that the businesses concerned have knowingly applied the wrong treatment. In all cases seen by HMRC, the toll operator has dealt with the importation and paid or claimed the import VAT to provide an administrative and cash flow benefit to their customers, as part of the overall service they provide.

The correct procedure is for the owner to be the importer of record and reclaim the import VAT, either in accordance with section 24 of the VAT Act 1994 (if registered for VAT in the UK) or under the Thirteenth VAT Directive (86/560/EEC).

For further details please see here >

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UK: Making Tax Digital – your new obligation as from 1 of April 2019


HMRC recently published their final version of the legislation introducing the new MTD VAT reporting obligations, which are to take effect from 1 April 2019.

From this date, businesses with UK taxable turnover above the VAT registration threshold (currently ₤85,000 per annum) will need to keep and preserve digital records and submit UK VAT returns using compatible software. Continue reading


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UK – Making tax digital as from 1 of April 2019 – The end of TAX Return


HMRC starting to transform the tax system, so that it is more effective, more efficient and easier for taxpayers as well as for the controls done by HMRC themselves.

VAT has been online since 2010 and over 98% of VAT registered businesses already file electronic returns. Continue reading


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UK – HMRC publish internal guidance on VAT recovery by Holding Companies


I wanted to alert you to the final published guidance issued by HMRC on the VAT recovery of holding companies.  The final internal guidance has confirmed when VAT recovery on acquisition costs should be possible, which is in line with the previous transaction cost VAT advice provided by PwC. Continue reading


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UK – HMRC to introduce new penalties for even unknown involvement in VAT fraud


Tower Bridge in London28 of September HM revenue and Customs (HMRC) published consultation about new penalties regime for participation in VAT fraud. If the government decides to proceed it will be included in Finance Bill 2017. Based on HMRCHMR experience the vast majority of customers meet their obligations. Penalties are only applied to a small minority of taxpayers. The penalty regime has to encourage compliance and prevent non-compliance. There is no objective to raise revenue with penalties. Penalties should be proportionate to the offence and may take into account past behaviour however consistent and standardised approach has to be applied. Penalties are designed in the way that compliant customers are in a better position than the non-compliant customers therefore penalties have to be a real threat. Continue reading


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PwC – Indirect Tax Forum – 17 March 2015


Aerial view of people sitting in a public area - PwC, Photo_RGB_PC_ 446.jpgI would like to draw your attention to our next Indirect Tax (ITX) Forum which will take place on 17 March 2015 in London.

We will update you on recent ITX cases as well as developments from HMRC. Further we will also run specific workshops on the following topics: Continue reading