The European Council has approved proposals for four “quick fixes” concerning VAT to simplify international trade. The “quick fixes” will be effective from 1 January 2020 and are expected to have considerable implications for businesses making intra-Community supplies.
In MEO (C-295/17), the Court of Justice of the EU (“CJEU”) ruled that payments which a telecom company was contractually entitled to receive as a result of the early termination of a customer’s contract were subject to VAT. The CJEU rejected the argument that they were non-vatable compensation.
The Baumgarten case (C-548/17) considers when VAT becomes due in a scenario where there are multiple payments which are conditional on future events. The default rule is that VAT becomes due on a supply of goods or services when they are supplied. However, there are exceptions, which allow for VAT to be due at a later date where successive payments are made in respect of those goods or services.
From 1 April 2019, Making Tax Digital (MTD) will become compulsory for most UK VAT registered businesses with a taxable turnover above the VAT registration threshold. Currently the VAT registration threshold in the UK is £85,000. Affected businesses will no longer be able to submit their VAT returns through HMRC’s online portal. VAT return data should now be submitted digitally using software compatible with HMRC’s Application Programming Interface (API) platform. Affected businesses are also required to maintain digital records and a digital VAT account.
