De Voil Indirect Tax Intelligence ISSUE 206 · HMRC has issued RCB 11/13 dated 24 June 2013. It...

De Voil Indirect Tax

IntelligenceJULY 2013ISSUE 206

NEWS IN BRIEFLegislation 2Government Publications 3European Commission 13Court of Justice of the European Union 13Supreme Court 16Court of Appeal 16High Court 17Tribunals 17First-tier Tribunal 18

EDITORIALSailing Close to the Wind? 21

INVOICESThe importance of being error-free 25

CASES AND COMMENTPaul Newey t/a Ocean Finance (Case C-653/11) 30

H20Two elements, one molecule 33

LAND-RELATED SERVICESA definition 36

CUSTOMSUpdate on reforms to the EU’s Generalised System of

Preferences 39

Letterpart Ltd • Typeset in XML • Division: DVITI_206 • Sequential 1

Letterpart Ltd • Size: 240mm x 162mm • Date: July 10, 2013 • Time: 14:6



NEWS IN BRIEF

Legislation

Finance Bill 2013: Public BillCommittee – 18 June

On 18 June, the Public Bill Committeeagreed, amongst others, the followingwithout amendment:

• Clause 179 (Rates of tobacco productsduty);

• Clause 180 (Meaning of “tobaccoproducts”);

• Clause 181 (Rates of gaming duty);• Clause 182 (Combined bingo);• Clause 185 (VED rates for light pas-

senger vehicles, light goods vehicles,motorcycles etc);

• Clause 186 (Not exhibiting licence:period of grace);

• Clause 187 (Vehicles not kept or usedon public road);

• Clause 188 and Schedule 35 (Vehiclelicences for disabled people);

• Clause 189 (Repayments of valueadded tax to health service bodies);

• Clause 190 and Schedule 36 (Valua-tion of certain supplies of fuel);

• Clause 191 (Reduced rate for energy-saving materials);

• Clause 196 (Standard rate of landfilltax);

• Clause 197 (Climate change levy:main rates);

• Clause 198 and Schedule 40 (Climatechange levy: supplies subject to car-bon price support rates etc);

• Clause 199 (IPT: Contracts that arenot taxable).

The Committee will sit next on Thursday,20 June.

Seehttp://services.parliament.uk/bills/2013-14/finance.html

Finance Bill 2013: Commonsstages completed

The Finance Bill completed its Commonsstages on 2 July. The date for the House of

Lords stage has yet to be announced. Nofurther amendments can now be madebefore Royal Assent.

The Denatured Alcohol (Amendment)Regulations 2013, SI 2013/1195

These amending regulations, which cameinto force on 1 July 2013, allow educa-tional establishments to receive smallamounts (up to five litres a year) of indus-trial denatured alcohol and trade-specificdenatured alcohol without prior writtenauthorisation from HMRC. They alsoalter the prescribed formulation for “com-pletely denatured alcohol” in accordancewith the proposed EU formulation witheffect from 1 July 2013.

Value Added Tax (Finance)Order 2013, SI 2013/1402

This order came into force on 28 June2013. It amends VATA 1994 Sch 9 Group5 to include as an exempt supply themanagement of authorised contractualschemes (“ACS”), and provides that, forthe purposes of applying the exemption,ACS are to be defined in accordance withsection 237 of the Financial Services andMarkets Acthttp://www.legislation.gov.uk/id/ukpga/2000/8. An ACS is a type ofcollective investment scheme establishedby amendments made to the FinancialServices and Markets Act 2000 by theCollective Investment in TransferableSecurities (Contractual Scheme) Regula-tions 2013 (SI/2013/000).

A Tax Information and Impact Note cov-ering this instrument will be published onthe HMRC website athttp://www.hmrc.gov.uk/thelibrary/tiins.htm.

Police and Criminal EvidenceAct 1984 (Application to immigrationofficers and designated customsofficials in England and Wales)Order 2013, SI 2013/1542

This order came into force on 25 June2013. It extends powers of arrest, searchof premises and seizure of evidence tocriminal investigations by immigrationofficers and customs officials.

2 DE VOIL INDIRECT TAX INTELLIGENCE JULY 2013





The Excepted Vehicles (Amendmentof Schedule 1 To The HydrocarbonOils Duties Act 1979) Order 2013,SI 2013/draft

This Order amends Schedule 1 to theHydrocarbon Oil Duties Act 1979.

Article 3 amends the definition of agricul-tural tractors to include tractors used forspreading material on roads to deal withfrost, ice or snow.

Article 4 makes a similar amendment tothe definition of light agriculturalvehicles.

A Tax Information and Impact Note cov-ering this instrument will be published onthe HMRC website atwww.hmrc.gov.uk/thelibrary/tiins.htm.

(There is a consultation on this draftlegislation – see under “Government pub-lications” below).

Government Publications

Revenue & Customs Brief 11/2013VAT: portfolio management feesfollowing ECJ decision inDeutsche Bank

HMRC has issued RCB 11/13 dated24 June 2013. It announces a change inVAT treatment of fees charge for portfoliomanagement services. The text of theBrief is set out in full below.

“VAT: Modified Treatment for Cer-tain Portfolio Management Fees Fol-lowing a European Court Ruling

Purpose of this Brief

This Brief modifies the current VAT treat-ment of certain supplies made by portfolioinvestment managers. This modification isneeded to bring the current treatmentinto line with the European Court judg-ment in the case of Deutsche Bank(C-44/11).

Who needs to read this?

• Businesses providing portfolio invest-ment management services

• Financial Advisors• Businesses and other organisations,

such as charities, that receive invest-ment management services

Background to the Judgment

Deutsche Bank provided discretionaryportfolio management services to indi-vidual investors. These services consistedof two elements:

(1) the activity of analysing and monitor-ing the assets owned by the investors inaccordance with a strategy agreed withthem, and(2) the consequential activity of actuallypurchasing and selling financial securitieson their behalf.

The investors paid a single annual port-folio management fee which included aseparately identified charge for buying andselling securities. The issue before theCourt was whether this charge consti-tuted consideration for a separate exemptsupply.

The Court decided that in the circum-stances at issue in the case the two ele-ments were parts of a single service and, asthose elements were of equal weight andtogether formed a single supply of taxableportfolio management services, the entirefee was subject to VAT at the standardrate.

Revised VAT Treatment

Whilst all portfolio management servicesare subject to VAT, the UK currentlytreats separate charges for effecting thepurchase and sale of securities as exemptfrom VAT on the basis that they areconsideration for separate supplies. Thispolicy is set out in Paragraph 1.6 ofNotice 701/49 Finance and in sectionVATFIN5800 of the VAT Finance guid-ance manual.

As a result of the judgment, it is clear thatfees charged by portfolio managers on anannual or other periodic basis for thepurchase and sale of securities can nolonger be treated as exempt from VAT,regardless of whether or not a separatecharge is made.

3ISSUE 206 DE VOIL INDIRECT TAX INTELLIGENCE





However, the ECJ in Deutsche Bank onlyconsidered the VAT position of periodicfees charged on a flat fee basis where therewas no direct link to the transactionsbeing executed. Where, therefore, fees arecharged strictly on a transaction by trans-action basis (that is, per purchase or sale ofinvestments) exemption will continue toapply. This is conditional upon the port-folio management services being con-tracted for on that basis and thetransaction charges being separately iden-tified in any VAT invoice. This VAT treat-ment will apply irrespective of whetherthe portfolio is managed on a full discre-tionary or on an advisory basis.

Portfolio management services can be dis-tinguished from other financial advisoryservices because there is an ongoing com-mitment to monitor and manage an indi-vidual client’s investment portfolio toformulate investment decisions orrecommendations. They should also bedistinguished from investment fund man-agement services (that is, the managementof pooled investments within a fundstructure) where VAT exemption isdependent upon the nature of the fundbeing managed.

Please see VATFIN7000 andVATINS5300 for guidance on VAT treat-ment of services provided by financialadvisors and VATFIN5100–5400 for guid-ance on investment fund managementservices.

Date from which new treatmenttakes effect

This revised VAT treatment will applyfrom 1st December 2013.

Where you are in any doubt about thecorrect VAT treatment please contact theVAT Helpline on 0300 200 3700.

The HMRC guidance will be updated indue course.

HMRC June 2013”

Revenue & Customs Brief 13/2013VAT: Loss-adjusting services formarine and aviation insurance claims

HMRC has issued RCB 13/13 dated3 July 2013. It announces that loss-adjusting services supplied in the UKshould always be standard rated. However,HMRC will not seek VAT on past sup-plies if businesses have applied the zerorate to loss-adjusting services relating to“qualifying” ships or aircraft where theseservices also involved a physicalinspection. From 1 September 2013,HMRC will require all businesses toaccount for VAT on such services. Thisbrief acknowledges that HMRC’s existingguidance was misleading about serviceswhich required a physical inspection to becarried out.

The text of the Brief is set out in fullbelow.

“VAT: Loss adjusting services sup-plied in connection with marine andaviation insurance claims – incorrectapplication of the zero-rate

Purpose of this Brief

This Brief confirms the VAT treatment ofloss adjusting services supplied in connec-tion with marine and aviation insuranceclaims and explains what action to take ifyou have failed to account for VAT inrespect of such services in the past.

We are issuing this Brief because itappears that many businesses have beenincorrectly treating such services as zero-rated surveys for VAT purposes.

Who needs to read this?

• Businesses that supply loss adjustingservices in connection with marine oraviation insurance claims.

• Insurers that receive such loss adjust-ing services (including insurers thatreceive such services from abroad).

• Insurance brokers or agents acting inthe marine and aviation insuranceindustry.

Action to take






Businesses that supply the relevant lossadjusting services should ensure that theyaccount for VAT at the standard ratewhere the services are treated as suppliedin the UK in accordance with the place ofsupply rules, and should review their ret-rospective VAT treatment in accordancewith this Brief.

Insurers that receive these services fromabroad should ensure that they accountfor standard rated VAT under the “reversecharge” and should also review their ret-rospective VAT treatment in accordancewith this Brief.

Place of supply and the reverse charge areexplained in Notice 741A “Place of sup-ply of services” (customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_PROD1_029955&propertyType=document).

Background

TheVAT Act 1994, Schedule 8, Group 8provides that the zero-rate of VAT appliesto certain services supplied in connectionwith “qualifying” ships and aircraft.HMRC’s guidance on this subject is inNotice 744C ‘Ships, aircraft and associatedservices’ (customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000169&propertyType=document).

Amongst other things, the zero-rate cov-ers surveying services or classification ser-vices supplied in connection with a‘qualifying’ ship or aircraft. This isexplained in Notice 744C – para-graphs 9.5 and 9.6 (customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000169&propertyType=document).

Some businesses have operated on themistaken belief that loss adjusting servicesare zero-rated under this provision.

VAT liability – HMRC’s view

Surveys

HMRC’s view is that the zero-rate isrestricted to surveys necessary to establishthe seaworthiness, airworthiness or classi-fication of a qualifying ship or aircraft toenable it to be registered and thereforemeet the direct needs of the ship oraircraft. Such surveys by their naturerequire a physical inspection of the ship oraircraft. Certain surveys carried out understatutory authority may be outside thescope of VAT.

Loss adjusting

We do not consider loss adjusting servicesto fall within this zero-rate under anycircumstances. It is our view that,although a supply of loss adjusting maycontain an element of inspection, suchinspections are not qualifying surveys forthe purposes of the zero-rate.

In any event an inspection is just one of anumber of elements that make up a supplyof loss adjusting which will also includeother elements such as establishing thefacts, valuing the claim and determiningthe appropriate redress. The overarchingor predominant nature of the supply istherefore not a surveying service. We con-sider the services to be single supplies ofloss adjusting and liable to the standardrate of VAT to the extent that they aresupplied in the UK. Such supplies do notmeet the direct needs of the ship oraircraft; rather they meet the needs of theinsurer in assessing the insurance claim.

Place of supply of loss adjustingservices

The place of supply of a loss adjustingservice is where the customer belongs.Therefore, loss adjusting supplies made tonon-UK located insurers will be outsidethe scope of UK VAT.

It is necessary to complete EC sales lists inrelation to supplies of goods and servicesmade to business customers based in theEC if those services would be liable toVAT if supplied in the UK. For informa-tion about this, see Notice 725 ‘The single






market’ – Section 17 (customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000152&propertyType=document).

Loss adjusting services received fromabroad

If a UK insurer receives loss adjustingservices from abroad, the UK insurer willbe required to account for standard ratedVAT on the receipt of the services underthe ‘reverse charge’ procedure. For infor-mation about the reverse charge, seeNotice 741A ‘Place of supply of services’– Section 18 (customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_PROD1_029955&propertyType=document).

What to do about past supplies

Services involving a physical inspec-tion

We accept that our guidance about ser-vices which required a physical inspectionto be carried out was misleading and thatbusinesses had a legitimate expectationthat these supplies were zero-rated.

Consequently, we do not require busi-nesses to account for VAT on past suppliesif they have incorrectly applied the zero-rate to loss adjusting services relating to’qualifying’ ships or aircraft that involved aphysical inspection. Businesses that havenot already started to account for VAT onsuch supplies should start to do so from1 September 2013.

Services not involving a physicalinspection

Businesses that applied the zero-rate toloss adjusting services that did not includea physical inspection are required toaccount for VAT, as set out in 1.6 below,unless they can demonstrate to their localComplaints Team that they were misled byHMRC and had a legitimate expectationthat those supplies would be zero-rated.

We would recommend businesses to con-tact their complaints team if they considerthat they have been misled by HMRC inrelation to the liability of their supplieshave acted in accordance with the mis-leading representation would suffer realdetriment if VAT was to be collected forpast supplies.

However, we consider that legitimateexpectation is less likely to apply to ser-vices not involving a physical inspection,because Notice 744C ‘Ships, aircraft andassociated services’ has, since 1997, madeit clear that physical inspection is an essen-tial condition to the zero-rate. The matterof whether we accept, in any individualcase, that a business had a legitimateexpectation will depend on the facts ofthe case.

For information about our complaintsprocedure, go to www.hmrc.gov.uk(www.hmrc.gov.uk/), and under ‘quicklinks’, select ‘Complaints’.

How to account for under declaredVAT

If, in light of this Brief, you have notaccounted for VAT correctly in the past,please see Notice 700/45 ‘How to correctVAT errors or make adjustments orclaims’ (customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000077&propertyType=document) forguidance on how to make an adjustment.

We understand that some businesses willfind it difficult to work out retrospectivelyto what extent their services were sup-plied in the UK, due to not having accessto details of their insurance customers’locations. In cases of co-insurance, theissue is complicated further because theremay be multiple customers based in mul-tiple locations. HMRC will consider rea-sonable apportionment methods for anybusiness that faces such difficulties – forexample, apportionment based onsampling. Any proposal for an apportion-ment method should be submitted






together with any error notification madein accordance with Notice 700/45.”

VAT Information Sheet 6/2013Notification of VehicleArrivals (NOVA)

HMRC have issued Information Sheet6/13 dated 25 June 2013. It is an updatedversion of the Sheet issued in April 2013.Changes include transitional arrangementsfor imported vehicles bought from a UKsupplier before 15 April 2013, and infor-mation on vehicles brought to the UK inparts.

For full details, seehttp://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType

=document&columns=1&id=HMCE_PROD1_032698

(See also CIP (13) 41 below)

Consultation on VAT RetailExport Scheme

HMRC are consulting until 30 Septem-ber 2013 on improvements to the retailexport scheme, better known as tax-freeshopping. The Government, say HMRC“wants to encourage visitors to choose theUK as the best destination for shoppingby making the scheme easy for customersto use. But it is also important to ensurethat UK taxpayers do not subsidise thosewho misuse the scheme, so any proposedchanges will look to ensure opportunitiesfor error and fraud are minimised.”

Full details of the consultation may befound athttps://www.gov.uk/government/consultations/vat-retail-export-scheme.

Notice 236 Customs: Importingreturned goods free of duty and tax

HMRC have published a revised (June2013) edition of Notice 236. The mainchange appears to be the inclusion ofdetails of the NOVA (Notification ofVehicle Arrivals) scheme.

Notice 709/3 Hotels andholiday accommodation

HMRC have published a revised (June2013) edition of Notice 709/3. The mainchange in this notice is in paragraph 4.2which has been revised to reflect HMRCpolicy regarding accommodation andcatering supplied to employees:

“If you supply your employees withaccommodation or food and drink, inyour establishment and they pay for it, thepayments are treated as including VAT andyou must account for it on your VATreturn. Where employees pay for mealsand so on from their pay including undera salary sacrifice arrangement employersmust account for VAT from 1 January2012 on such supplies unless they arezero-rated. Subject to the normal rules,the employer can continue to recover theVAT incurred on related purchases.”

Notice 725: The Single Market

HMRC have published a revised (June2013) edition of Notice 236. Para 16.19has been amended to give details ofchanges to the format of the Irish VATregistration number, and the format forCroatia (from 1 July 2013).

Notice 742A Opting to tax landand buildings

HMRC have published a revised (June2013) edition of Notice 742A. The noticehas been updated to amend very minorerrors in the previous edition. Thechanges are in:

• paragraph 13.1, where the word “to”was omitted under the first bulletpoint, and

• paragraph 13.8.3, where the format-ting of the bullet points was incorrect.

VAT treatment of refunds made bymanufacturers – consultationdocument

This consultation document, issued on31 May 2013, concerns the VAT treat-ment of refunds paid by manufacturers






directly to consumers, and seeks to dis-cover the extent to which manufacturersmake such payments; to consider howUK law needs to change to accommodatethem; what impact that may have andwhat administrative burdens it may giverise to.

The consultation follows the announce-ment in the 2013 Budget that the Gov-ernment intended to legislate to allowmanufacturers to adjust their VAT to takeaccount of refunds they make to finalconsumers. It does not appear to relate toElida Gibbs-type situations, but where aconsumer is entitled to refund in the caseof:

• faulty products;• damaged products;• customer dissatisfaction.

The consultation started on 31 May 2013and will end on 31 August 2013.

For further details, seehttps://www.gov.uk/government/uploads/system/uploads/attachment_data/file/203281/VAT_treatment_of_refunds_made_by_manufacturers.pdf

Consultation outcome: VAT –Consideration of the case to extendthe education exemption to for-profitproviders of Higher Education

A summary of the responses to the gov-ernment’s consultation on extending theVAT education exemption to for-profitproviders of Higher Education (HE) hasbeen published. Commercial organisationsfavoured the extension but did not feel itwent far enough. Concerns were raisedover additional administrative burdenswhich may result and others argued theproposals did not address other equallyimportant areas of training such as voca-tional training.

For the summary in full, seewww.gov.uk/government/uploads/system/uploads/attachment_data/file/205767/130606HE_CONDOCresponse-Final.pdf

New HMRC helpline numbersfor VAT

New telephone numbers are being intro-duced for VAT helplines on 12 June 2013.

For most people the new numbers willreduce the cost of calling these helplines.

Line OldNumber

NewNumber

VATEnquiries

0845 0109000

0300 2003700

VATOnlineServicesHelpdesk

0845 0108500

0300 2003701

VAT,Customs& ExciseWelshLanguageLine

0845 0100300

0300 2003705

For those with hearing or speech impair-ments, the new textphone number forboth VAT Enquiries and VAT OnlineServices Helpdesk changes from 0845 0108500 to 0300 200 3719.

0845 numbers will still be available forabout the next 18 months.

Other 0845 numbers will change in thecoming months as part of a rolling pro-gram to give customers cheaper access toHMRC helplines.

Customs Information Paper (13) 33 –Upgrade to the New ComputerisedTransit System (NCTS) and theExport Control System (ECS)

HMRC have issued CIP (13)33 dated5 June 2013. It announces that an upgradeto the NCTS and ECS services is beingimplemented throughout the EU to takeaccount of Croatia joining the EuropeanUnion from the 1 July. The ECS andNCTS services will be unavailable from08:00 until 23:59 on the 1 July 2013 toimplement this upgrade.






For full details, seehttp://www.hmrc.gov.uk/jccc/cips/2013/cip-13-33.pdf

Customs Information Paper (13) 34:Compliance with Community Transit

HMRC have issued SIP (13)34 dated14 June 2013. It announces that the Cen-tral Community Transit Office (CCTO) isrevising its procedures to help “custom-ers” get their response to HMRC queriesright first time.

Letters of inquiry will contain moredetailed information and/or specificquestions. In response, HMRC anticipate“customers” will provide HMRC withmore detailed information, including anexplanation of the circumstances givingrise to irregularities.

For full details, seehttp://www.hmrc.gov.uk/jccc/cips/2013/cip-13-34.pdf.

Customs Information Paper (13) 35:UK Balance of Competences Review

HMRC have issued CIP (13) 35 dated14 June 2013. It invites comments by6 August 2013 on the government’sreview of the effects of EU law on theUK’s national interests.

The Balance of Competences review is acomprehensive Government audit of whatthe EU does and how it affects the UK. Itis intended to make a serious contributionto the debate about how to modernise,reform and improve the EU, and HMRCare seeking comments views.

Among other things the review will beconsidering whether the EU strikes theright balance between regulating importsand exports and facilitating internationaltrade; whether harmonisation of laws atEU level is beneficial to the UK; andwhat are the advantages and disadvantagesof EU action on international trade.

This review provides a unique opportu-nity for everyone affected by EU rules oninternational trade to express their viewsand to submit evidence to theGovernment. The evidence received willthen be used to write a report, setting out

all the arguments about the advantagesand disadvantages of EU action. Thesereports will help to inform the debateabout the UK’s relationship with the EU.

For full details, seehttp://www.hmrc.gov.uk/jccc/cips/cip-13-35.pdf.

Customs Information Paper (13) 36:Croatia Accession to theEuropean Union

HMRC have issued CIP (13) 36 dated14 June 2013. It announces that the entryinto force and accession of Croatia to theEU is expected to take place on 1 July2013. Croatia will become the 28thMember of the European Union, andseeks comments on transitionalarrangements.


Customs Information Paper (13) 37:Tariff Preference – Derogation forcertain products imported from Perueligible for a quota

HMRC have issued CIP (13)37 dated14 June 2013. It announces details of aretrospective derogation from the normalpreferential rules of origin, effective1 March 2013, for certain productsimported from Peru.


Customs Information Paper (13) 38:The draft Union Customs Code

HMRC have issued CIP (13) 38 dated21 June 2013. It announces that the Euro-pean Commission has put forward a regu-lation postponing the effective date of theModernised Customs Code from 24 June2013 until 1 November 2013, whilenegotiations continue on the re-cast tocreate the Union Customs Code.

CIP (12)06 announced that work hadcommenced to recast the ModernisedCustoms Code (Regulation (EC)






450/2008 of the European Parliament andof the Council of 23 April 2008) – knownas the MCC.

That work has now largely concluded.The recast – the Union Customs Code(UCC) – has been agreed by the Euro-pean Council and European Parliament.The text is still subject to (non-substantive) amendment by linguists toensure all language versions are consistent,so cannot be considered final.

The UCC will not be published prior to24 June 2013, so it will not repeal theModernised Customs Code (MCC)before that Regulation is due to enterinto effect. A proposal put forward by theEuropean Commission to postpone theeffective date of the MCC has also beenagreed.

This Regulation – to change the 24 Junedate in the MCC to 1 November – willbe published in the Official Journalaround 19 June.

For full details,see http://www.hmrc.gov.uk/jccc/cips/2013/cip-13-38.pdf

(nb Since the release of this paper, theregulation – (EU) No 528/2013 has beenpublished in the OJ)

Customs Information Paper (13) 39:Accession of Croatia to the EU –impact on transit andexport procedures

HMRC have issued CIP (13) 39 dated20 June 2013. It supplements CIP (13) 36on the impact Croatia’s accession to theEU on 1 July 2013 will have on transitand export procedures, and may beviewed in full at http://www.hmrc.gov.uk/jccc/cips/2013/cip-13-39.pdf.

Customs Information Paper (13) 40:Import Control Systemsoftware release

HMRC have issued CIP (13) 40 dated20 June 2013. This paper is to make usersof the Import Control System aware of anissue where outstanding trader response

messages have not been downloaded priorto the new software release on 1 July2013.

The paper may be viewed in full athttp://www.hmrc.gov.uk/jccc/cips/2013/cip-13-40.pdf.

Customs Information Paper (13) 41:Changes to the Notification ofVehicle Arrivals (NOVA)online service

HMRC have issued CIP (13) 41 dated20 June 2013. It announces that, witheffect from 1 July 2013, the NOVA sys-tem will cover commodity codes for allvehicle types. For a temporary periodafter launch in April 2013, the system wasnot able to cope with certain specialistvehicles.

The paper may be viewed in full athttp://www.hmrc.gov.uk/jccc/cips/2013/cip-13-41.pdf

(See also VAT Information Sheet 6/2013above).

Customs Information Paper (13) 42:Anti-dumping duty onChinese ceramics

HMRC have issued CIP (13) 42 dated28 June 2013. It states that the EU hasimposed definitive anti-dumping duty onimports of certain ceramic tableware andkitchenware from China, which leaves alarge number of security deposits requir-ing adjustment from the provisional dutyimposed in November 2012. This paperinvites traders who have more than fiftyentries requiring adjustment to submitclaims in a schedule.

Queries should be addressed [email protected] or telephone 0161 261 5527.

Machine Games Duty first returns –penalties for late filing

HMRC has announced that they havedecided not to apply penalties for late






submission of the first returns of MachineGames Duty. No other penalties areaffected.

For further details, seehttp://www.hmrc.gov.uk/news/mgd-first-returns.htm.

Excise Information Sheet 6/2013:Changes to denatured alcohol from1 July 2013

The formulation for Completely Dena-tured Alcohol (CDA) is changing from thecurrent formulation. The new formula-tion will be for every 100 parts by volumeof alcohol mix 3 parts by volume ofisopropyl alcohol, 3 parts by volume ofmethylethylketone and one gramme ofdenatonium benzoate.

The supply of free samples of IndustrialDenatured Alcohol (IDA) and Trade Spe-cific Denatured Alcohol (TSDA) will bepossible without the current restrictionson supplying only to traders authorised toreceive such products.

The requirement for educational estab-lishments to be authorised to receive IDAor TSDA will be waived, providing theyreceive less than five litres per year.

The new formula will become the stand-ard across European Member States onand after 1 July 2013. UK law will bechanged with effect from the 1 July 2013by means of a Statutory Instrument whichwill be laid before the House ofCommons.

For further details, seehttp://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&columns=1&id=HMCE_PROD1_032752

Excise Information Sheet 7/2013:Update on the accession of Croatiato the EU on 1 July 2013

HMRC have issued Excise InformationSheet 7/13 dated 26 June 2013. Itannounces that, from 29 June 2013 it willbe possible to create export accompanying

documents (eADs) to authorise move-ments to Croatia, but this must only bedone for movements where the despatchdate is on or after 1 July. Documents willnot be transmitted to Croatia through theEU Gateway until Monday 1 July.

For full details, seehttp://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&propertyType=document&id=HMCE_PROD1_032793.

Report: Progress in tacklingtobacco smuggling

HMRC are making use of a logical strat-egy for combating tobacco smoking butmore can be done in enforcement and thereporting of limitations, a report from theNational Audit Office has found. Progressis being made by building on overseasintelligence, although HMRC are stilllikely to fall short of its planned target inpreventing revenue loss.

The report identifies the following keyfindings:

• HMRC’s strategy for tackling tobaccosmuggling is logical and includes arange of complimentary measures;

• HMRC’s approach to deterring anddisrupting the illicit market within theUK is not yet effectively integrated;

• HMRC have made progress against itskey operational objectives but perfor-mance fell short of internal targets in2012–13;

• HMRC’s focus on building overseasintelligence is yielding success;

• HMRC are unlikely to achieve itsplan to prevent revenue loss of £1.4bnfrom investment in new tobacco ini-tiatives over the spending reviewperiod;

• HMRC’s analysis shows a continuingproblem of over-supply of genuinetobacco products to overseas marketsdespite the introduction of supplychain legislation in 2006;






• inaccuracies in the reported impact ofcriminal investigations limit its useful-ness as a performance measure.

The report makes the following recom-mendations regarding tackling tobaccosmuggling:

• HMRC should develop theirapproach to tackling the trade intobacco products within the UK byassessing the deterrent impact ofenforcement action against peopleselling illicit tobacco and by furtherdeveloping their collaborative workwith police, trading standards andother local bodies.

• HMRC should evaluate the optionsfor improving their methodology forestimating tax losses from tobaccofraud. They should continue toexplore options including othersources of expertise, such as academicinput.

• HMRC should improve the quality oftheir key performance information ordisclose limitations in any publicreporting. Teams must take a moreconsistent and evidence-basedapproach to estimating the revenueloss prevented from criminalprosecutions.

• HMRC should ensure projected ben-efits from key initiatives are fullytested before they are announced,with a more robust approach to chal-lenging the feasibility of projects at anearly stage.

• HMRC should establish why legis-lation has not yet resolved the prob-lem of over-supply of tobaccooverseas. A more robust stance shouldbe taken in their enforcement activi-ties with tobacco manufacturerswhere it establishes clear evidence ofover-supply to foreign markets.

Seewww.nao.org.uk/wp-content/uploads/2013/06/10120-001-Tobacco-smuggling-Full-report.pdf

Allowing the use of rebated fuelwhen gritting roads – draftlegislation for consultation

HMRC have published a draft amendingorder for consultation until 28 July, whichwill allow agricultural vehicles to userebated fuel (or “red diesel”) when grit-ting roads. The change is expected tocome into force by 1 November 2013.HMRC first consulted in July 2012 on alegislative change to formalise this use ofred diesel during severe weather.

HMRC invite general comments on thedraft statutory instrument (for details ofwhich see “legislation” above. It isintended that the changes will be intro-duced by 1 November 2013. Commentsshould be made to:

[email protected] or:

Steve Clarke, HMRC Indirect Tax Direc-torate, 3W Ralli Quays, Stanley Street,Salford M60 9LA.

Report: HMRC disclosurecompliance withcriminal investigations

A report by HM Inspectorate of Con-stabulary (HMIC) examines the extent towhich HM Revenue and Customs(HMRC) is meeting its statutory disclo-sure obligations under the Criminal Pro-cedure and Investigations Act 1996.Overall, it finds HMRC has invested inprocesses to reduce the risk of unsuccess-ful prosecutions. However, improvementis needed in governance and oversight toimprove understanding of the DisclosureCoordination Unit’s role.

For details of the report, seewww.hmic.gov.uk/media/hmrcs-disclosure-compliance-with-criminal-investigations-20130610.pdf.

NAO report onHMRC’s 2012/13 accounts

In its report on HMRC’s latest set ofaccounts, the National Audit Office notesgood progress made in reducing costs, butfinds customer service levels still some






way short of an “acceptable standard”. Thereport also acknowledges the key rolechanges in international tax rules will playin enabling HMRC to meet increasedrevenue targets through anti-avoidanceand anti-fraud measures.

For the full text of the report, see NAO40/13 (www.nao.org.uk/report/hm-revenue-and-customs-2012-13-accounts-report-by-the-comptroller-and-auditor-general/).

European Commission

Commission requests UnitedKingdom to ensure private boats donot use lower taxed fuel

The European Commission has formallyrequested the United Kingdom to amendits legislation to ensure that private pleas-ure boats such as luxury yachts can nolonger buy lower taxed fuel intended forfishing boats. Under EU rules on fiscalmarking for fuels, fuel that can benefitfrom a reduced tax rate has to be markedby coloured dye. Fishing vessels for exam-ple are allowed to benefit from fuel sub-ject to a lower tax rate but private boatsmust use fuel subject to a standard rate.

Currently the UK law does not imposefuel distributors to have two separate fueltanks, one with marked fuel subject to alower tax rate and the other with regularfuel subject to a standard tax rate. As aconsequence, private leisure boats can notonly use fuel intended for fishing vesselsbut also risk heavy penalties if they travelto another Member State and the ship iscontrolled by the local authorities.

The Commission’s request takes the formof a reasoned opinion. In the absence of asatisfactory response within two months,the Commission may refer the UnitedKingdom to the EU’s Court of Justice.

For further details, seehttp://europa.eu/rapid/press-release_MEMO-13-470_en.htm#PR_metaPressRelease_bottom.

Decisions concerning infringementprocedures against nineEU countries

The European Commission has publisheda MEMO and two press releases on20 June concerning infringement proce-dures in the fields of taxation and customsagainst nine EU Member States. For eachcase, the Member State(s) involved andthe policy area are briefly mentionedbelow.

Belgium, implementation of key EU rulesagainst tax evasion (IP/13/572);Bulgaria, customs duty and tax relief andagreement with the USA (IP/13/573);Finland, implementation of key EU rulesagainst tax evasion (IP/13/572);Greece, implementation of key EU rulesagainst tax evasion (IP/13/572); discrimi-natory taxation on milk and meat(MEMO/13/585);Italy, implementation of key EU rulesagainst tax evasion (IP/13/572);Poland, implementation of key EU rulesagainst tax evasion (IP/13/572);Portugal, discriminatory taxation of non-resident companies (MEMO/13/583);Spain, discriminatory taxation of invest-ments in non-resident companies(MEMO/13/583);

United Kingdom, VAT refunds frommanufacturers to consumers(MEMO/13/583) (http://europa.eu/rapid/press-release_en.htm).

Court of Justice of theEuropean Union

Staatssecretaris van Financiën vX BV, Case C-651/11; 30 May 2013unreported.

Article 5(8) of EC Sixth Directive —transfer of “totality of assets”

In a Netherlands case, the shares in acompany had been held by four differentcompanies, before they were sold to apublic company in 1996. One of thevendor companies (X), which had held a30% shareholding, reclaimed input tax on






the professional services relating to thesale. The tax authority issued an assess-ment to recover the tax, and X appealed.The case was referred to the ECJ for aruling on the interpretation of Article 5(8)of the EC Sixth Directive. The ECJ heldthat the disposal of a 30% shareholdingdid not amount to “the transfer of atotality of assets” within Article 5(8),“irrespective of the fact that the othershareholders transfer all the other shares inthat company to the same person at prac-tically the same time”. (The ECJ observedthat, since a disposal of shares was anexempt supply under Article 13B(d)(5), “aright to deduct will exist only if the costof the services supplied to X in relation tothat disposal is part of the general costsrelating to its overall economic activity,without being incorporated in the saleprice of those shares”. It was for thenational court to determine whether thatwas the case.)

G Kostov v Direktor na Direktsia“Obzhalvane i upravlenie naizpalnenieto” – Varna pri Tsentralnoupravlenie na Natsionalnata agentsiaza prihodite (Case C-62/12; 13 June2013 unreported).

Bailiff – taxable person

In a Bulgarian case, the ECJ held thatArticle 9(1) of Directive 2006/112/EC “isto be interpreted as meaning that a naturalperson who is already a taxable person forvalue added tax purposes in respect of hisactivities as a self-employed bailiff must beregarded as a “taxable person” in respectof any other economic activity carried outoccasionally, provided that that activityconstitutes an activity within the meaningof the second subparagraph of Arti-cle 9(1)”.

HMRC v P Newey (t/a OceanFinance), ECJ Case C-653/11;20 June 2013 unreported

The principle of “abuse”

A financial adviser (N), who was regis-tered for VAT, was the controlling share-holder of a Jersey company (AC), which

provided loan broking services in the UK.HMRC issued an assessment on N,charging VAT of more than £10,000,000,on the basis that he should be treated assupplying the loan broking services andwas liable to a “reverse charge” underVATA 1994, s 8(1) in respect of advertis-ing services supplied by another Jerseycompany (W). N appealed. The First-tierTribunal allowed his appeal, but theUpper Tribunal directed that the caseshould be referred to the ECJ for a rulingon whether the national court shoulddepart from a strict contractual analysis.The ECJ held that “contractual terms,even though they constitute a factor to betaken into consideration, are not decisivefor the purposes of identifying the sup-plier and the recipient of a ‘supply ofservices’”. The contractual terms could bedisregarded “if it becomes apparent thatthey do not reflect economic and com-mercial reality, but constitute a whollyartificial arrangement which does notreflect economic reality and was set upwith the sole aim of obtaining a taxadvantage, which it is for the nationalcourt to determine”.

Re Promociones y ConstruccionesBJ 200 SL (Case C-125/12; 13 June2013 unreported)

Persons liable for payment of VAT(Articles 193–205)

In a Spanish case, the ECJ held thatArticle 199(1)(g) of Directive2006/112/EC “must be interpreted asmeaning that every sale of immovableproperty by a judgment debtor carriedout not only in the course of the liquida-tion of the debtor’s assets but also in thecourse of insolvency proceedings occur-ring before such liquidation comes withinthe concept of a compulsory sale proce-dure, provided that such a sale is necessaryin order either to settle creditors’ claimsor to enable the debtor to re-establish itseconomic or professional activities”.






Minister Finansów v RR DonnelleyGlobal Turnkey Solutions Poland Sp.Zoo, ECJ Case C-155/12; 27 June2013 unreported

Storage services

A Polish company (P) provided servicesfor the storage of goods to undertakingsestablished in other Member States of theEuropean Union and in non-memberStates. Those services included admittingthe goods to a warehouse, placing thegoods on storage shelves, storing thegoods, packaging the goods for the cus-tomer, issuing the goods, unloading andloading. The Polish tax authority issued aruling that, where the warehouse was inPoland, the place of supply was in Polandand VAT was chargeable accordingly. Pappealed, contending that its suppliesshould be treated as taking place where itscustomer was established. The case wasreferred to the ECJ for a ruling on theinterpretation of Article 47 of Directive2006/112/EC. The ECJ held that Arti-cle 47 “must be interpreted as meaningthat the supply of a complex storageservice, comprising admission of goods toa warehouse, placing them on the appro-priate storage shelves, storing them, pack-aging them, issuing them, unloading andloading them, comes within the scope ofthat article only if the storage constitutesthe principal service of a single transactionand only if the recipients of that serviceare given a right to use all or part ofexpressly specific immovable property”.

Finanzamt Freistadt Rohrbach Urfahrv Unabhängiger FinanzsenatAußenstelle Linz, ECJ Case C-219/12; 20 June 2013 unreported

Photovoltaic installation

In an Austrian case, the ECJ held that “theoperation of a photovoltaic installation onor adjacent to a house which is used as adwelling, which is designed such that theelectricity produced is always less than theelectricity privately consumed by itsoperator, and supplied to the network inexchange for income on a continuingbasis” was an economic activity.

Teritorialna direktsia naNatsionalnata agentsia za prihodite –Plovdiv v Rodopi-M 91 OOD, ECJCase C-259/12; 20 June 2013unreported.

Accounting (Articles 241–249)

In a Bulgarian case, the tax authorityimposed a penalty on a company whichhad reclaimed input tax shown on a can-celled invoice. The company appealed,and the case was referred to the ECJ for aruling on whether Articles 242 and 273 ofDirective 2006/112/EC permitted theimposition of a penalty on “taxable per-sons who have allegedly failed to fulfil ontime their duty to show circumstances intheir accounts that are of significance tothe calculation of VAT”. The ECJ heldthat “the principle of fiscal neutrality doesnot preclude the tax authorities of aMember State from imposing upon ataxable person who has not fulfilledwithin the period prescribed by nationallegislation his obligation to record in theaccounts and to declare matters affectingthe calculation of the value added tax forwhich he is liable a fine equal to theamount of the value added tax not paidwithin that period where the taxable per-son has subsequently remedied the omis-sion and paid all the tax due, togetherwith interest”. It was for the nationalcourt to determine whether the amountof the penalty imposed exceeded “what isnecessary to attain the objectives of ensur-ing the correct collection of tax and pre-venting evasion”.

European Commission v Kingdom ofSpain (Case C-189/11; 6 June 2013unreported)(Advocate-General’s opinion)

Scope of Article 306

The European Commission took pro-ceedings against Spain, seeking a declara-tion that it had failed to correctlyimplement Articles 306–310 of Directive2006/112/EC. Advocate-GeneralSharpston expressed the Opinion that, byexcluding “sales to the public, by retailagents acting in their own name, of travel






services organised by wholesale agents; byauthorising travel agents, in certain cir-cumstances, to charge in the invoice anoverall amount that is not related to theactual VAT charged to the customer, andby authorising the latter, where he is ataxable person, to deduct that overallamount from the VAT payable, and byauthorising travel agents, in so far as theybenefit from the special scheme, to deter-mine their taxable amount globally foreach tax period”, Spain had failed to fulfilits obligations under the directive.

European Commission v Republic ofPoland (and related applications)(Case C-193/11; 6 June 2013unreported)(Advocate-General’s opinion)

Tour operators

The European Commission formed theopinion that eight Member States hadadopted an incorrect interpretation of thespecial scheme for travel agents providedby Articles 306–310 of Directive2006/112/EC, in that they had failed torestrict the scheme to cases where thecustomer was the traveller (as was the casein Germany and the UK). The Commis-sion took proceedings against the eightMember States, seeking a declaration thatthey had failed to fulfil their obligations.Advocate-General Sharpston delivered anOpinion rejecting the Commission’scontentions. She reviewed the differencesbetween the different language versions ofthe Directive, and observed that “it is hardto avoid the impression that the court isbeing called upon to decide a matter ofVAT policy (and of legislative drafting)which has proved beyond the capabilitiesor the willingness of the Member Statesand the legislature”.

TVI Televisão Independente SA vFazenda Pública, (Case C-618/11;11 June 2013 unreported)(Advocate-General’s opinion)

“Consideration” (Article 11A1(a))

Portugal imposed a tax on televisionadvertising, which the television com-panies paid (and recharged to theadvertisers). The tax authority issued aruling that this tax formed part of thecompanies’ turnover for VAT purposes. Atelevision company appealed, and the casewas referred to the ECJ for a ruling onthe interpretation of Article 11A1 of theEC Sixth Directive. Advocate-GeneralCruz Villalón expressed the Opinion thatthe tax should be included in thecompany’s turnover “if the decisive fiscalrelationship of public law character isbetween the tax authorities and the tele-vision operators”, but not if “the decisivefiscal relationship of public law characterruns between the advertisers and the taxauthorities”. It was for the national courtto determine “which of these two under-standings of the nature of fiscal substitu-tion in the precise context of thescreening tax is the correct one accordingto national law”.

Supreme Court

HMRC v Aimia Coalition LoyaltyUK Ltd (formerly known as LoyaltyManagement UK Ltd) (No 2) [2013]UKSC 42

Claim for deduction of input tax –HMRC inviting Supreme Court tomake further reference to Court ofJustice of European Union followingjudgment – Whether Court obliged byEU law to make reference – Whetherissue of EU raised on whichdecision necessary

Following the decision in HMRC v AimiaCoalition Loyalty UK Ltd (No 1), SC[2013] UKSC 15; [2013] STC 784,HMRC made further written submissionscontending that there should be a further






reference to the ECJ. The Supreme Courtunanimously rejected this contention.

Court of Appeal

Atlantic Electronics Ltd v HMRC(No 4), CA [2013] EWCA Civ 651

Notice of objection toWitness Statements

A company (E) reclaimed input tax ofmore than £1,000,000 on the purchase ofa large number of mobile telephones.HMRC rejected the claim on the basisthat the transactions formed part of anMTIC fraud, and E appealed. HMRCapplied for several witness statements tobe admitted in evidence. E objected tosome of the statements. The First-tierTribunal directed that statements by twoof HMRC’s witnesses should beexcluded. HMRC appealed to the UpperTribunal, which upheld the First-tierdecision in respect of one of thewitnesses. Judge Bishopp observed that“this was evidence HMRC wished to putin after the expiry of the time limitimposed by tribunal directions, alreadyextended several times, and when theyknew that an application for permissionwould be necessary. A litigant wishing toput in late evidence has a duty to makethe application promptly and, in a casesuch as this where the evidence is beingcompiled, to forewarn his opponent: it isnot a case in which doing so wouldundermine the purpose of the evidence.HMRC did not forewarn, and took anunexplained amount of time to producethe evidence.” However Judge Bishoppallowed HMRC’s appeal in respect oftheir other witness, whose statementrelated to the conviction of one of thepeople involved in the transactions on twocounts of conspiracy to cheat the revenue.Applying the principles laid down byLightman J in Mobile Export 365 Ltd vHMRC, the presumption “must be that allrelevant evidence should be admittedunless there is a compelling reason to thecontrary”. E appealed to the CA, whichunanimously upheld Judge Bishopp’s

decision. Arden LJ observed that the state-ment was “relevant to explicate the con-victions”, and that “HMRC would beprejudiced by its exclusion”.

High Court

R (oao GSTS Pathology Llp) vHMRC (and related applications), QB21 June 2013 unreported

Partnership applying for information tobe omitted for judgment

A limited liability partnership (G) hadapplied to the QB for judicial review ofHMRC’s proposal to alter the tax treat-ment of certain supplies. Following thehearing, it applied for certain informationto be omitted from the published judg-ment, on the grounds that it was com-mercially sensitive. The QB rejected theapplication. Leggatt J observed that theinformation had been “contained in wit-ness statements which were in evidence atthe hearing”, and that “the entire hearingtook place in open court”. He held thatthere was “no good reason to restrictpublication of any information containedin (G’s) unaudited accounts”. On theevidence, it appeared that G “would prefercompetitors and customers not to knowthat, if the proposed tax treatment of itssupplies is implemented, (G) will beunable to continue to trade for long unlessits business is restructured in a way thatwill itself have certain detrimentalconsequences”. However, it was “impor-tant in the interests of open justice toexplain the facts which justify theconclusion”.

Tribunals

Upper Tribunal

WM Morrison Supermarkets Ltd vHMRC, [2013] UKUT 247 (TCC)

Supplies of disposable barbecues

A company (W) sold disposablebarbecues. It accounted for VAT at the






standard rate. It subsequently submitted arepayment claim on the basis that itshould have treated part of the considera-tion as attributable to supplies of charcoaland as taxable at the reduced rate. HMRCrejected the claim and W appealed. TheFirst-tier Tribunal dismissed the appeal,applying the principles laid down in CardProtection Plan Ltd. Judge Cannan heldthat “it is not open to a taxpayer to carveout an element of what would otherwisebe treated as a single supply in order toapply a reduced rate to that element of thesupply”. The Upper Tribunal upheld thisdecision. Vos J held that “it is preciselybecause the domestic statute did notexpressly identify “charcoal as part of dis-posable barbecues” as being worthy of areduced rate that they do not attract one.The disposable barbecue is acknowledgedto be a single supply. The result is neithersurprising nor undesirable since disposablebarbecues are leisure items, and are notlikely to be used as a regular means ofusing solid fuel for domestic cooking”.

HMRC v The Honourable Society ofMiddle Temple, UT [2013] UKUT250 (TCC)

Lease of land — whether a separatesupply of water

Trustees of certain land in the City ofLondon leased several properties, used asbarristers’ chambers, to tenants. The trus-tees had opted to tax the properties. Thetenants were supplied with water. Inaccounting for VAT, the trustees treatedpart of the rent paid by the tenants asattributable to a zero-rated supply ofwater. HMRC issued a ruling that thetrustees were making a single supply of aleased property, and that none of theconsideration qualified for zero rating.The Upper Tribunal upheld HMRC’s rul-ing (reversing the First-tier decision).Judge Sinfield held that “in order not todisturb the functioning of the VAT sys-tem, account must be taken of therequirement that every transaction mustnormally be regarded as distinct and inde-pendent and a transaction which com-prises a single supply from an economic

point of view should not be artificiallysplit”. On the evidence, “the leasing ofthe premises and the supply of the waterto those premises under the lease form asingle economic supply which it would beartificial to split because, from the point ofview of the typical tenant, both the prem-ises and the water are equally indispensa-ble and inseparable”. Therefore “theprovision of the premises and the coldwater is an indivisible supply which itwould be artificial to split”.

First-tier Tribunal

L Swain v HMRC, (2013) TC02719

Conversion of barn intoliving accommodation

A county council had granted planningpermission for the conversion of fourderelict barns into holidayaccommodation. However the work wasnot proceeded with, and the barnsremained derelict. Subsequently a woman(S) purchased one of the barns and con-verted it into a house. The relevant plan-ning permission provided that theoccupation of the building “shall be lim-ited to a manager or proprietor of theholiday accommodation business”. Sreclaimed VAT on the conversion.HMRC rejected the claim on thegrounds that the effect of VATA 1994,Sch 8, Group 5, Note 2(c) was that theconverted building was not “designed as adwelling”. The First-tier Tribunal dis-missed S’s appeal. Judge Poole specificallydeclined to follow Judge Kempster’s deci-sion in Burton v HMRC (TC02522). Heobserved that the effect of Town andCountry Planning Act 1990 was that “anydevelopment carried out in breach ofplanning permission (and any non-compliance with a condition in a plan-ning permission) are to be regarded as“prohibited” under planning law”. (JudgePoole noted that HMRC had appealed tothe Upper Tribunal against Judge Kemp-ster’s decision in Burton, and expressed thehope “that the Upper Tribunal will take






this opportunity to bring some clarity andcertainty to the law in this area”.)

Taste of Thai Ltd v HMRC(2013) TC02721

VAT: penalty mitigated by 100%

A company (T) which operated a restau-rant registered for VAT in 2006 but dereg-istered in 2008. In September 2010 itsturnover again exceeded the registrationthreshold, so that it became liable toregister for VAT from November 2010. Itdid not so until December 2011, andderegistered in March 2012 after a subse-quent decline in its turnover. HMRCimposed a penalty, which they mitigatedby 90%, for the delay in registration. Tappealed. The First-tier Tribunal allowedthe appeal. Judge Poole held that thecircumstances did not constitute a “rea-sonable excuse”, but directed that in viewof the extent of T’s disclosure, the penaltyshould be mitigated in full. (He observedthat for the purposes of FA 2008, Sch 41para 13(5)(a), the date when tax “firstbecame unpaid” was 31 December 2010,being the date when T would first havebeen required to pay VAT if it had regis-tered at the correct time.)

Bilal Jamia Mosque v HMRC(2013) TC02727

VAT: amount of penalty (FA 2007,Sch 24 paras 4–12)

A mosque registered for VAT in 2006.In2008 it submitted a return claiming aninput tax repayment of £36,747, relatingto the costs of constructing the mosque.HMRC rejected the claim. In 2010 themosque submitted a return claiming aninput tax repayment of £42,214, whichincluded the same input tax whichHMRC had rejected two years earlier.HMRC again rejected the claim, andimposed a penalty under FA 2007,Sch 24, at the rate of 49% of the potentiallost revenue. The mosque appealed againstthe penalty. The First-tier Tribunalreviewed the evidence in detail andallowed the appeal in part. Judge Cannan

observed that, with regard to churchesand mosques, “any business activity isusually incidental to the main non-business purpose of providing a place ofworship”, but that HMRC had agreed toallow most churches to recover 25% oftheir input tax. He also observed that theconstruction of a building which was usedfor a relevant charitable purpose couldqualify for zero-rating. He found that,during discussions which had followed thesubmission of the 2008 return, themosque had formed the impression that itmight be possible to reclaim 65% of theinput tax. On that basis, he held that 35%of the claim had been a “deliberate inac-curacy” and that 65% had been a “carelessinaccuracy”. He also held that the penaltyshould be imposed at 35% of the potentiallost revenue relating to the deliberateinaccuracy and at 15% of the potential lostrevenue relating to the careless inaccuracy(reducing the total penalty to 22% of thepotential lost revenue).

The Open University v HMRC (No 2)(2013) TC02729

VAT: supplies of education(Article 13A1(i))

The BBC invoiced the Open Universityin respect of expenditure which itincurred in broadcasting television andradio programmes relating to Open Uni-versity courses. Following the VAT tribu-nal decision in The Open University vC & E Commrs (No 1), [1982] VATTR 29(VTD 1196), these supplies were treatedas subject to VAT up to 31 July 1994.(Customs accepted that, from August1994, they qualified for exemption underVATA 1994, Sch 9, Group 6, Item 4.) In2009 the BBC lodged a repayment claimwith regard to the supplies made from1978 to July 1994. HMRC rejected theclaim and the Open University (as therecipient of the supplies) appealed, con-tending that the supplies qualified forexemption under Article 13A1(i) of theEC Sixth Directive. The First-tier Tribu-nal accepted this contention and allowedthe appeal. Judge Sinfield specificallydeclined to follow the 1982 decision in






The Open University v C & E Commrs(No 1), as the tribunal’s reasoning in thatcase was inconsistent with the subsequentECJ decision in Stichting Regionaal Oplei-dingen Centrum Noord Kennemerland / WestFriesland (Horizon College) v Staatssecretarisvan Financiën, ECJ Case C-434/05. Heheld that “the BBC had education of atype similar to that described in Arti-cle 13A1(i) of the Sixth VAT Directive asone of its objects”. Accordingly the sup-plies had qualified for exemption underArticle 13A1(i).

Sygma Security Systems Ltd vHMRC (2013) TC02732

Whether FA 2009, s 108 applicable

A company (S) appealed against a defaultsurcharge, contending that it had enteredinto a deferred payment agreement underFA 2009, s 108. The First-tier Tribunaldismissed the appeal, finding that S hadfailed to comply with the terms of theagreement and holding that the circum-stances did not constitute a reasonableexcuse.

Lady Henrietta Pearson v HMRC(2013) TC02735

VAT: conversion of barn intoresidential unit — effect ofplanning permission

A woman (P) obtained planning permis-sion for the conversion of two adjacentderelict barns into “a live-work unit”, andclaimed a refund of VAT under VATA1994, s 35. HMRC rejected the claim onthe basis that the work failed to meet therequirements of VATA 1994, Sch 8,Group 5, Note 2(c). The First-tier Tribu-nal allowed P’s appeal. Judge Bishoppexpressed the view that “it is not theprovince of HMRC or this tribunal topolice the planning rules” and held that“there has been compliance with thespirit, even if not the strict letter, of theconsent”.

G Seeff (t/a TPL Associates) vHMRC, (2013) TC02738

Flat-rate Scheme: Reg 55B(1) —application for retrospective operation

A management consultant (S) voluntarilyregistered for VAT in 2007. However, histurnover never reached the registrationthreshold, and he deregistered fromDecember 2011. In applying for deregis-tration, he requested that his VAT liabilityfrom 2007 to 2011 should be recomputedretrospectively, adopting the flat-ratescheme. HMRC rejected this request butthe First-tier Tribunal allowed S’s appeal.Judge Staker observed that S “need neverhave registered for VAT at all”, and foundthat “in the present case there are excep-tional circumstances justifyingretrospectivity”.

Colaingrove Ltd v HMRC (No 5)(2013) TC02746

VAT: sale of caravans —apportionment of consideration

A company which sold caravans suppliedverandahs with some of the caravanswhich it sold. Initially it accounted forVAT on these verandahs, but it subse-quently submitted a repayment claim onthe basis that it should have treated theverandah as part of the supply of thecaravan, and as zero-rated. HMRCrejected the claim and the First-tier Tribu-nal dismissed the company’s appeal. JudgeHellier held that “the verandah was nei-ther incidental to nor integral with thecaravan”.

Alexandra CountrywideInvestments Ltd v HMRC,(2013) TC02751

Public house converted into twosemi-detached houses

A company converted a public house intotwo semi-detached houses. It reclaimedinput tax on the work. HMRC rejectedthe claim on the basis that, before thework, part of the public house had beenused as a flat for a manager, so that the






work failed to qualify for zero-rating. TheFirst-tier Tribunal allowed the company’sappeal against this decision, applying theCA decision in C & E Commrs v Jacobs,and declining to follow the VAT tribunaldecision in Calam Vale Ltd. Judge Kemp-ster held that “the fact that an additionaldwelling has been created means that Note9 does not prevent the conversion comingwithin Item 1(b)”.) He also held that therewas no justification for distinguishingbetween claims under s 35 (such as Jacobs)and claims under s 30 (such as CalamVale).

Miss DL La Roche v HMRC (2013)TC02758, [2013] UKFTT 356 (2013)TC02758.

Registration — Delay by Customs inprocessing application

A woman (L) purchased a retail shop in2000 and traded from it until December2008, when she closed the shop becauseshe had been suffering from ill-health. Shesent a form VAT7 to HMRC with acovering letter. HMRC did not acknowl-edge receipt. Subsequently HMRC issuedestimated assessments and surcharges. Lwrote to HMRC in February 2012,repeating her request for the cancellationof her registration. HMRC agreed tocancel her registration from February2012, but refused to backdate the cancel-lation to December 2008. L appealed. TheFirst-tier Tribunal allowed her appeal.Judge Walters found that, on the balanceof probabilities, the letter and form VAT7which L had sent in December 2008“were received by HMRC and, presum-ably, mislaid by them”.

EDITORIAL

Sailing Close to the Wind?

On 20 June 2013 the Court of Justice ofthe European Union (“CJEU”) releasedits judgement in the case of Paul Newey,t/a Ocean Finance (Case C-653/11). Thedecision may – just may – prove to be a

landmark decision and it will almost cer-tainly affect other cases where there is awhiff of avoidance in the air. Opinions onthe decision and its implications will beboth varied and mixed. Indeed, I ampersonally torn between two opposingviews: on the one hand thinking that thedecision is a triumph for common sensein relation to its conclusion on substanceover form (or “economic and commercialreality”, as it is referred to in the decision)and, on the other, thinking it has gonetoo far in appearing to conclude thattransactions can be re-characterised evenif not (necessarily) contrary to the pur-pose of the Directive. What is clear is that,as a decision, Newey is in many respects anunsatisfactory one.

Essentially, I find myself thinking thatthere is something missing from thisdecision: a reasoned written Opinion ofthe Advocate General. For reasons whichare unexplained, the five judges decidedto proceed to judgement without such anOpinion and inevitably – or so it seems incases where there is no Opinion – thereare aspects to the decision which leave thereader with unanswered questions, such as“what precisely did the Court think wascontrary to purpose?”.

Before delving (or perhaps diving?)deeper it is perhaps worth reflecting onthe facts of the case.

Background

Mr Newey (who traded as “OceanFinance”) was a loan broker established inTamworth, in the UK. The broking ser-vices he supplied were exempt from VATunder what is now Article 135(1)(d) of thePrincipal VAT Directive. Advertising ser-vices (which some readers will recallincluded TV adverts featuring yachts sail-ing in clear blue skies and slight seas)supplied to Mr Newey were subject toVAT which was not recoverable.

In order to avoid incurring irrecoverableVAT on the advertising fees, Mr Neweyincorporated Alabaster (CI) Ltd (“Alabas-ter”) in Jersey. It was established as a loan






broking company of which Mr Neweywas sole shareholder and to which hegranted the right to use the business name“Ocean Finance”. Alabaster employedone person on a full-time basis and had itsown management comprised of Jerseyresident individuals who apparently hadno direct experience of broking. Asrequired by Jersey law, Mr Newey playedno part in the management of the com-pany. The broking contracts were con-cluded directly between the lenders andAlabaster, which received the brokingcommissions. As Alabaster did not havethe wherewithal to process loan applica-tions it entered into an agreement withMr Newey who (with his employees)provided the services from his UK callcentre, such services in essence coveringall the processing tasks for the loan brok-ing business. Under that agreement,Mr Newey had the power to negotiate theterms of the contracts concluded betweenAlabaster and the lenders.

Mr Newey received fees fixed of up to60% of the gross commissions receivablein respect of each loan by Alabaster, pluscertain expenses or disbursements. Poten-tial borrowers contacted the UK call cen-tre which processed and forwarded thoseapplications which met the credit eligibil-ity criteria to Alabaster’s directors in Jerseyfor authorisation. The approval processtook about one hour to complete and norequest for authorisation was ever refused.

Advertising services were provided by athird party Jersey agency, Wallace Barnaby& Associates Ltd (“Wallace Barnaby”)under a contract with Alabaster. WallaceBarnaby in turn obtained the advertisingservices from agencies established in theUnited Kingdom. Mr Newey had thepower to approve the content of theadvertisements and met with one of theUK agencies for that purpose. Followingthose meetings, the UK agency maderecommendations to Wallace Barnabywho, in turn, made recommendations toAlabaster. None of those recommenda-tions was rejected.

The Case before the Tribunal

HMRC’s case was that, for VAT purposes,the advertising services were supplied toMr Newey in the UK and so were liableto VAT under the reverse charge and,furthermore, that Mr Newey had suppliedthe loan broking services in the UK. Inthe alternative, they submitted that thearrangements amounted to an abuse ofrights on the basis of Halifax and Others(Case C255/02) and must bere-characterised – that is, HMRC claimedthe right to “redefine the contractualterms to re-establish the situation thatwould have prevailed in the absence of thetransactions constituting the abusive prac-tice” (thus removing its VAT advantage).

Under either analysis HMRC alleged thatMr Newey owed c. £11m of VAT forwhich it issued an assessment. Mr Neweyappealed and in a decision of the First TierTribunal (FTT) on 23 April 2010 theappeal was allowed.

The FTT held as a finding of fact thatAlabaster carried on the loan brokingbusiness and was the recipient of theadvertising services. The FTT also heldthat, although the essential aim of thearrangement involving Alabaster was toobtain a tax advantage, there was no abusesince the arrangement was not contrary tothe purpose of the Principal VATDirective.

Unsurprisingly, the Commissionersappealed to the Upper Tribunal whichdecided to refer a number of questions tothe CJEU for a preliminary ruling:

“(1) In circumstances such as those inthe present case, what weight should anational court give to contracts indetermining the question of whichperson made a supply of services forthe purposes of VAT? In particular, isthe contractual position decisive indetermining the VAT supply position?(2) In circumstances such as those inthe present case, if the contractualposition is not decisive, in what cir-cumstances should a national courtdepart from the contractual position?






(3) In circumstances such as those inthe present case, in particular, to whatextent is it relevant:

(a) Whether the person whomakes the supply as a matter ofcontract is under the overall con-trol of another person?(b) Whether the business know-ledge, commercial relationship andexperience rests with a personother than that which enters intothe contract?(c) Whether all or most of thedecisive elements in the supply areperformed by a person other thanthat which enters into the con-tract?(d) Whether the commercial riskof financial and reputational lossarising from the supply rests withsomeone other than that whichenters into the contracts?(e) Whether the person makingthe supply, as a matter of contract,sub-contracts decisive elementsnecessary for such supply to aperson controlling that first personand such subcontracting arrange-ments lack certain commercialfeatures?

(4) In circumstances such as those inthe present case, should the nationalcourt depart from the contractualanalysis?(5) If the answer to question 4 is“no”, is the tax result of arrangementssuch as those in this case a tax advan-tage the grant of which would becontrary to the purpose of the SixthDirective within the meaning of para-graphs 74 to 86 of [Halifax and Oth-ers]?(6) If the answer to question 5 is yes,how should arrangements such asthose in the present case bere-characterised?”

The decision of the CJEU

The CJEU decided to consider the UpperTribunal’s first four questions as one. Itsaid that, in essence, these asked whether

contractual terms are decisive for the pur-poses of identifying the supplier and therecipient in a case involving a supply ofservices and, if not, under what circum-stances those terms may bere-characterised.

The Court re-affirmed that the term“supply of services” is objective in nature,that it applies without regard to the pur-pose or results of the transactions con-cerned and without it being necessary forthe tax authorities to determine theintention of the taxable person (Halifaxand Others, paragraphs 56 and 57). As tothe importance of contractual terms, theCJEU referred to the decisions in thejoined cases of Loyalty Management UKand Baxi Group, paragraphs 39 and 40(cases C53/09 and C55/09) and, in par-ticular, to the need to bear in mind thatthe economic and commercial realities is afundamental criterion for the applicationof the common system of VAT.

The Court proceeded to explain thatcontractual terms do not always whollyreflect “the economic and commercialreality of the transactions” particularlywhere there is a “purely artificial arrange-ment” and that the purpose of the abuseof rights doctrine is to bar wholly artificialarrangements which do not reflect eco-nomic reality.

Notwithstanding the FTT’s findings offact (that, in accordance with the contrac-tual terms, Alabaster supplied loan brok-ing services to the lenders and receivedthe supplies of advertising services) theCJEU suggested it was “conceivable” thatthe economic reality was that the advertis-ing services were supplied to Mr Neweyin the UK. It proceeded to confirm,however, that it was for the referringcourt to determine whether the contrac-tual terms genuinely reflected economicreality or whether Mr Newey actuallysupplied the loan broking services and wasthe recipient of the advertising services. Inthe event of such a finding the CJEUconfirmed that the contractual termswould have to be redefined so as todetermine what the position would have






been but for the transactions constitutingthe abusive practice. It concluded that, inthis case, it would mean the Commission-ers could legitimately regard Mr Newey(and not Alabaster) as the supplier of theloan broking services and the recipient ofthe supplies of advertising.

To summarise, the conclusion reached bythe CJEU was that contractual terms arenot decisive and may be disregarded ifthey do not reflect economic and com-mercial reality but constitute a whollyartificial arrangement set up with the soleaim of obtaining a tax advantage. This issomething for the national court to deter-mine although it seems clear that theCJEU itself considered that the arrange-ments involving Alabaster were indeedartificial and should be re-characterised.

Analysis of the decision

In reaching its conclusion, the Court saidit had answered the first four questionsasked by the Upper Tribunal. The reality isthat it paraphrased those questions andproceeded to answer a question it hadasked itself (and not the questions it hadbeen asked). As a result we arguably haveneither the clarity nor the depth of guid-ance which the Upper Tribunal was seek-ing; for example, we have no specificanswer to the sub-questions posed atquestion three on the extent of Mr New-ey’s involvement and risk, other than thepassing comment in paragraph 48 of thedecision that those are matters of factwhich should be taken into account.

From its questions, it seems clear that theUpper Tribunal was focused on two dif-ferent issues:

• can a court determine the identity of asupplier by reference to the substance(“commercial and economic reality”)as opposed to the legal (contractual)form; and

• are the arrangements adopted byMr Newey contrary to the purpose ofthe Directive,

and yet the CJEU dealt only with the firstof those. The Upper Tribunal’s fifth ques-tion clearly contributed to this outcome

as, unfortunately, it asked for an answeronly if the answer to question 4 was “no”.The Court, having concluded that theanswer to that question was “yes”, decidedthat it did not need to answer the remain-ing questions. Question 5, however, was acritical question and, perhaps with thebenefit of hindsight, was one whichshould have asked for an answer irrespec-tive of the answers to the precedingquestions. Question 5 sought to deter-mine whether or not the tax advantageobtained by Mr Newey was “contrary tothe purpose” of the VAT Directive. TheCourt did not address this issue explicitly,if at all.

Implications of the decision

So where does the decision in Newey takethe abuse debate? One view I have seenexpressed is that the judgement takes thedebate no further forward. Time will tell,but that view may prove to be far fromthe mark. It will be recalled that Halifaxintroduced a twofold test:

(i) there must be the accrual of a taxadvantage contrary to the purpose ofthe Directive; and

(ii) the essential aim of the transactionmust be to obtain a tax advantage.

The decision in Newey suggests a slightlydifferent twofold test:

(i) there are wholly artificial arrange-ments in which the contracts do notreflect the economic and commercialreality; and

(ii) the arrangements are set up with thesole aim of achieving a tax advantage.

There is no suggestion in the first leg inNewey that the arrangements need to be“contrary to the purpose” of the Directiveor even abusive. Perhaps that is becausesuch arrangements should be viewed asbeing implicitly abusive and so thereforeautomatically contrary to purpose but thedecision is silent on this point. If this isnot the correct analysis then the alter-native is that the CJEU has introduced anew test, separate and distinct from Hali-fax, a test in which one need determine






only whether the arrangements reflect the“economic reality” and, if they do not,then, as with Halifax, the aim of thearrangement must be considered. Hadthere been an Opinion of the AdvocateGeneral there may have been substantiallyless uncertainty and greater clarity overwhat the Court intended.

The future

Undoubtedly this case will be arguedfurther before the Upper Tribunal when itreconvenes to consider the judgement andits implications. Certainly when I firstread the decision, my immediate reactionwas that Ocean Finance was sunk but onfurther reflection I am not so sure. It willalso be interesting to see what impact itwill have in the case of Pendragon. Clearlythe Court of Appeal has not had thebenefit of hearing argument on theNewey decision and so – possibly irre-spective of the decision of the Court ofAppeal – Pendragon may well be destinedfor the Supreme Court. I can also perhapsforesee a further reference to the CJEU inwhich it is asked to clarify what it meantin Newey. What does seem clear is that theavoidance and abuse debate is set to con-tinue for some time to come.

Marc WelbyBDO LLP

INVOICES

The importance of beingerror-free

This article is concerned with two recentjudgments, one from the Court of Justiceof the European Union (CJEU) and onefrom the First Tier Tribunal, both ofwhich permanently deny the right todeduct VAT to fully taxable persons whohad received taxable supplies because theydid not hold a valid VAT invoice. Whilst itis clear that Member States are entitled torequire sufficient evidence of the right todeduct, primarily via a valid invoice, thesecases represent a new hard line approach

in that they deny the right of the taxpayerto remedy the situation.

Where a taxpayer is permanently deniedthe right to deduct VAT that has beenproperly incurred, the tax authoritiesenjoy a windfall in that the total VATcollected in the supply chain will exceedthe VAT paid by the final consumer, inapparent contradiction of the principle ofneutrality.

As some readers with an unusually keeninterest in politics and economics mayhave noticed, we are living in a time ofausterity where public spending, particu-larly in Europe, is coming under ever-increasing pressure in an attempt to cutbudget deficits. It may be that this need tosafeguard the public finances has insinu-ated itself into the judiciary leading to atougher line being taken with those tax-payers who do not fully comply with theprocedural rules governing taxdeductions. Whether there is a policyreason or whether these cases have arrivedcoincidentally, they should sound a warn-ing to all taxpayers to ensure that theyobtain the correct documentation to sup-port input tax recovery and that theiraccounting systems can identify and dealwith incomplete invoices.

The traditional view of the right todeduct and the principle of neutrality

The right to deduct VAT incurred on thepurchase of goods and services used tomake taxable supplies has long been heldby the CJEU and the national courts to besacrosanct. The CJEU has developed amantra to refer to this which is repeatedthrough a chain of cases, each referring tothe immediately preceding case making agolden chain stretching back to theinfancy of the tax in the EU.

In the recent judgment in the case ofBonik (C-285/11), the mantra was statedin the following terms at paragraphs 25 to27 (omitting the references in that case tothe earlier case law):

“25…It should be borne in mind that,according to settled caselaw, the right






of taxable persons to deduct VAT dueor already paid on goods purchasedand services received as inputs fromthe VAT which they are liable to pay isa fundamental principle of the com-mon system of VAT established by therelevant EU.

26…In that regard, the Court hasconsistently held that the right ofdeduction provided for in Article 167et seq. of Directive 2006/112 is anintegral part of the VAT scheme andin principle may not be limited. Inparticular, the right of deduction isexercisable immediately in respect ofall the taxes charged on transactionsrelating to inputs.

27…The deduction system isintended to relieve the trader entirelyof the burden of the VAT payable orpaid in the course of all his economicactivities. The common system of VATconsequently ensures neutrality oftaxation of all economic activities,whatever the purpose or results ofthose activities, provided that they arethemselves subject to VAT.”

An example of the Court’s view of theprimacy of the right to deduct is the caseof Société Générale des Grandes Sourcesd’Eaux Minérales Françaises (CaseC-361/96). This was concerned with anEighth Directive claim. EU law and itsGerman implementation both requiredthat an Eighth Directive claim be accom-panied by the original invoice. The tax-payer said that the original invoice waslost in the post when it was sent to thelawyers drawing up the Eighth Directiveclaim. The taxpayer submitted a duplicateinvoice but the claim was rejected by theGerman tax authorities. The taxpayerappealed and the matter was referred tothe CJEU. The CJEU held that MemberStates were entitled to rely on presenta-tion of a duplicate invoice where therewas no risk of fraudulent repeated use ofthat invoice to make repeated claims. Fur-ther, the principle of non-discriminationrequired that if a domestic taxpayer coulduse a duplicate invoice, a taxpayer in

another Member State could do so insimilar circumstances to make an EighthDirective claim.

Other cases have held that the failure tocomply with a formal requirement cannotremove a substantive right. In Collée (CaseC-146/05), the accounting entries neces-sary to demonstrate that an intra-Community supply had taken place weremade late. The Court held that “the prin-ciple of fiscal neutrality requires … that anexemption from VAT be allowed if thesubstantive requirements are satisfied, evenif the taxable person has failed to complywith some of the formal requirements”.In Vogtländische Straßen (Case C-587/10),the Court held that a rule of German lawthat made exemption for intra-Community supplies of goods dependenton the provision of the VAT registrationnumber of the purchaser was contrary toEU law if the supplier could providesufficient alternative evidence to demon-strate that the purchaser was a taxableperson.

The principle of neutrality has beenapplied in a number of different ways toensure that taxpayers receive fairtreatment. In Elida Gibbs (CaseC-317/94), where a manufacturer gavecash to retail purchasers of its toothpasteon redemption of vouchers, the manufac-turer was permitted to reduce the value ofits taxable supply to wholesalers in orderto ensure that the VAT collected in thesupply chain by the tax authorities wasnot in excess of that paid by the customer,even though there was no reduction inthe consideration paid by the wholesalers.In Faxworld (Case C-137/02), a partner-ship was established with the sole objectof setting up a limited company. Thepartnership incurred VAT on various costsbut did not make any supplies. The Ger-man authorities denied input tax recoveryto Faxworld but the CJEU held thatrecovery must be permitted, holding that“from an economic point of view, itseems clear, a single business has been setup, going through various preparatorystages before becoming operational”.






These cases are examples of the way thatthe VAT system has traditionally beenthought to work with substantive rightstrumping procedural issues. Whilst it pro-vides fairness for taxpayers, it also forms abasis for the principle of abuse – if inputtax can be deducted where the substantiveright is engaged but there is a proceduralproblem, it is a small step to reject theright to deduct where the procedural stepsare followed but there is a substantive issue(as in the Halifax case itself). However,this balance between taxpayers and Mem-ber States appears to have taken a decisiveshift in favour of the Member States withthese recent judgments.

The Petroma case (C-271/12)

As set out in the CJEU’s mantra, the rightto deduct is an intrinsic part of the neu-trality of the VAT system. However, it isnow under attack. Petroma was concernedwith the Martens group of companies inBelgium. Petroma Transports SA was thecompany which employed the majority ofstaff and it supplied them to a number ofthe other group companies.

During the relevant periods (1994onwards), Belgian law required that VATinvoices state “the customary name of thegoods supplied and the services provided,the quantity of those goods and servicesand the purpose of the services”. Thesewere not requirements of the Sixth Direc-tive itself, but at the relevant time, theDirective permitted Member States to setadditional criteria.

The Belgian authorities carried outinspections from 1997 onwards and ques-tioned some of the invoices. These con-tained an overall price but neither a unitprice nor the number of hours worked bythe staff. The Belgian tax authorities disal-lowed the deductions made on the basis ofthese invoices.

Following this, the companies providedfurther information to the tax authoritiesbut this was not accepted as sufficient toallow deduction. The taxpayer appealedand in February 2005, the Court of First

Instance of Mons delivered judgmentupholding the position of the tax authori-ties in respect of a certain number of theinvoices.

For reasons not explained by the CJEU,the Court of First Instance then reopenedthe case, and with a demonstration of thespeed and commerciality that endears thelegal system to those lucky enough toenjoy an encounter with it, produced afurther judgment within a scant five years,finding against the taxpayer (a mere 13years from the time of the inspections).

The taxpayer appealed to the BelgianCourt of Appeal which reacted with blis-tering pace, making the reference littlemore than two years later. The referenceasked two questions.

1 Is a Member State entitled to refuse toallow a deduction by a taxable personthat received services and has incom-plete invoices, where those invoiceshave been supplemented by furtherinformation seeking to remedy theomission?

2 If the Member State is entitled torefuse deduction in such circum-stances, must it repay the VAT to thesupplier?

The CJEU cited the usual mantra as tothe primacy of the right to deduct and setout the legislative rules governinginvoices. In this regard, it noted that thePrinciple VAT Directive does not permitMember States to add their own require-ments for invoices but that this case wasconcerned with the Sixth Directive whichdid.

The active part of the judgment is veryshort and is found at paragraphs 32 to 36.

“32…It appears from the order forreference that the right to deduct VATwas denied to taxable persons, therecipients of services, on the groundthat the invoices at issue in the mainproceedings were not sufficientlyaccurate and complete. In particular,the national court notes that most ofthose invoices did not indicate the






unit price or the number of hoursworked by the staff of the companiesproviding the services, making itimpossible for the tax authority todetermine the exact amount of taxcollected.

33…The appellants in the main pro-ceedings argue that the fact that theinvoices do not contain certain par-ticulars required by national legislationis not such as to call into question theexercise of the right to deduct VATwhen the occurrence, nature andamount of the transactions have beensubsequently demonstrated to the taxauthority.

34…It should be noted that the com-mon system of VAT does not prohibitthe correction of incorrect invoices.Accordingly, where all of the materialconditions required in order to benefitfrom the right to deduct VAT aresatisfied and, before the tax authorityconcerned has made a decision, thetaxable person has submitted a cor-rected invoice to that tax authority,the benefit of that right cannot, inprinciple, be refused on the groundthat the original invoice contained anerror (see, to that effect, Pannon GépCentrum, paragraphs 43 to 45).

35…However, it must be stated that,with regard to the dispute in the mainproceedings, the information neces-sary to complete and regularise theinvoices was submitted after the taxauthority had adopted its decision torefuse the right to deduct VAT, withthe result that, before that decisionwas adopted, the invoices provided tothat authority had not yet been recti-fied to enable it to ensure the correctcollection of the VAT and to permitsupervision thereof.

36…Consequently, the answer to thefirst question is that the provisions ofthe Sixth Directive must be inter-preted as not precluding nationallegislation, such as that at issue in themain proceedings, under which theright to deduct VAT may be refused to

taxable persons who are recipients ofservices and are in possession ofinvoices which are incomplete, even ifthose invoices are supplemented bythe provision of information seekingto prove the occurrence, nature andamount of the transactions invoicedafter such a refusal decision wasadopted.”

The judgment proceeds on the basis thatthe supplies did take place (paragraph 43states that it was confirmed in the mainproceedings that the services were in factprovided). As such, the permanent denialof the right to deduct appears to runcounter to the principles and mantra setout above.

Further, the CJEU did not ameliorate theimpact by answering the second questionto the effect that the VAT must be repaidto the supplier where it cannot be claimedby the recipient. The principle of neutral-ity did not provide any basis for a supplierthat made taxable supplies being entitledto a refund of VAT that it was required topay to the tax authorities.

The judgment of the CJEU that invoicescan be amended before, but not after, thetax authorities have made a decision as totheir validity is one that should be ofsignificant concern to taxpayers. Where aninvoice is accepted by a taxpayer and theVAT claimed on the next return, it isunlikely that any further inspection of thatinvoice will be carried out by thetaxpayer. The only occasion it is likely tobe looked at again is on an inspection bythe tax authorities. If it is they whodiscover an error on the invoice, it is toolate for it to be rectified, at least underBelgian law.

This judgment does not require MemberStates to refuse to permit invoices to becorrected or supplemented after errorshave been discovered by the tax authori-ties; rather, it permits Member States todo so if that forms part of their nationallegislation. Fortunately, the current posi-tion in the UK is much more generous totaxpayers than appears to be the case inBelgium.






Regulation 29 (1) of the VAT Regulationsrequires that a taxable person hold a validinvoice in order to deduct VAT “save asthe Commissioners may otherwise allowor direct either generally or specially”.This gives the Commissioners a broaddiscretion. In March 2007, they issued astatement of practice entitled “VATStrategy: Input Tax Deduction without aValid VAT Invoice”. The document sug-gests that the first step should be to seek avalid invoice from the supplier. If thiscannot be done, it sets out the basis onwhich the Commissioners will exercisetheir discretion to permit a deduction. Itsparagraph 17 states that ‘claimants willneed to be able to answer most of thequestions at Appendix 2 satisfactorily. Inmost cases, this will be little more thanproviding alternative evidence to showthat the supply of goods or services hasbeen made (this has always been HMRC’spolicy).’

Thus, the rigours of the Belgian approachdo not currently apply in the UK. How-ever, the Commissioners may changetheir policy and/or amend Regulation 29and its grant of discretion in the future.Equally, in specific cases, they may con-sider that there are grounds for not apply-ing their discretion. Therefore, taxpayersshould be alert to the risks of invalidinvoices both in the UK and in any otherjurisdictions where they operate and takesteps to identify and correct these beforeaudit by the authorities.

The Taygroup case (TC02739)

Taygroup is a judgment of the First TierTribunal and is concerned with self-billing arrangements (whereby the cus-tomer issues invoices on behalf of itssupplier and provides those invoices to itssupplier so that the supplier can accountfor the VAT that is due). The taxpayer wasin the business of road transport andneeded to engage with small local haulagebusinesses. Many of these were owner-drivers with no tax/accounting infrastruc-ture and therefore Taygroup decided toenter into self-billing arrangements withthem.

However, some of these self-billingarrangements were flawed in a number ofrespects. The regulations provide that self-billing arrangements shall end within 12months of their inception, or on theexpiry of the contract between customerand supplier to which the arrangementrelates. Taygroup’s contracts with its sup-pliers had no set date of expiry. However,the self-billing agreements were typicallystated to last for a period of approximatelyfive years.

A more serious issue was that some of thesuppliers were not, in fact, registered forVAT at the time that the supplies tookplace. The evidence was that the managersof Taygroup’s local depot would obtainthe relevant information from the owner-drivers, including VAT number, but thatno checks were carried out to verify.

The Commissioners carried out a visit in2008. During the visit, having establishedthat no checks had been carried out byTaygroup, the officer checked the num-bers using the Europa system and identi-fied nine invalid VAT registrationnumbers.

The Commissioners issued assessments torecover the input tax claimed in respect ofsupplies from the suppliers with invalidregistration numbers. Having discoveredthat the self-billing agreements were forperiods that were not permitted (seeabove), they maintained that all of theself-billing invoices were invalid and didnot evidence a right to deduct. However,where it could be established that thesupplier was properly VAT registered, theywere prepared to exercise their discretionto permit input tax deduction.

After a review of further evidence pro-vided by Taygroup, the assessments wereamended so that the sums assessed wereonly in respect of supplies where thesupplier had not been shown to haveaccounted for output tax on the suppliesin question.

For two of the suppliers, Taygroup hadpaid them fees in excess of the VATregistration threshold in the space of a






year. For these two at least, it was clearthat they were taxable persons, even if notregistered, and therefore the supplies wereproperly subject to VAT.

The Tribunal held that the self-billingagreements were invalid both becausethey were for periods longer than a yearand because the suppliers were not regis-tered for VAT (registration being a condi-tion of a self-billing agreement).

Taygroup argued that denying it input taxwould breach its fundamental right todeduct under EU law. It relied on the lineof case law referred to above in respect ofbreach of formal conditions not beingsufficient to deny a substantive right.However, the Tribunal did not accept this.It held that self-billing is an exception tothe general system of VAT invoicing thatintroduces risks to the revenue if thesupplier de-registers. Given that the cus-tomer could carry out regular checks onthe position of its suppliers, the Tribunalheld that it was not disproportionate, andtherefore not a breach of EU law, for thecustomer to bear the risk.

The final argument for the taxpayer wasthat the Commissioners should have exer-cised their discretion to allow the claims.The Tribunal held that it had jurisdictionto review whether the Commissionershad exercised their discretion reasonablyand concluded that they had. It held thatTaygroup should have confirmed its sup-pliers’ registration position in all cases,including those where the suppliers werepaid in excess of the registrationthreshold. The Tribunal accepted that theCommissioners were correct to denyinput tax deduction where there wasinsufficient evidence that the suppliers hadpaid the output tax and that the taxpayerhad not provided such evidence in respectof the assessed amount.

Conclusion

These two judgments demonstrate thatreceiving, and being able to evidence thereceipt of, a taxable supply is now notnecessarily sufficient to entitle a taxpayer

to deduct input tax if the correct invoiceis not held. Given the economic climate,it is likely that the Member States willincreasingly seek to restrict input taxrecovery where they are able to. Whilstthe Commissioners currently apply a rela-tively generous regime in terms of accept-ing alternative evidence of the entitlementto deduct, the judgment in Petroma maylead them to reconsider. Further, the Tay-group judgment makes clear that customersare very much at risk in self-billingarrangements.

Taxpayers may wish to review theiraccounts payable procedures to ensure thatinvoices are checked for completeness andaccuracy, and to review the VAT registra-tion status of any suppliers with whomthey have self-billing arrangements.

Mitchell MossErnst & Young

CASE AND COMMENT

Paul Newey t/a OceanFinance (Case C-653/11)Court of Justice of theEuropean Union (CJEU)

The Decision

This case sought guidance from the CJEUon the factors to be taken into accountwhen determining the correct recipient ofsupplies and also the situations when anational court should depart from theanalysis set out in a contract.

In this case, Mr Newey ran a companywhich provided loans (Ocean Finance).He incorporated a wholly-owned loanbroking company in Jersey (Alabaster),and supplies of advertising services weremade to this company. This structuresought to mitigate irrecoverable input taxthat was being charged to Ocean Financewhen it contracted for advertising servicesitself.

HMRC challenged this structure and sug-gested that it was in fact Ocean Finance






who was receiving the advertising servicesand providing the loan broking services.On this basis, the services received byOcean Finance were subject to the reversecharge, with the related input tax beingirrecoverable. HMRC argued alterna-tively that the arrangements fell foul ofthe “abuse of law” principle set out inHalifax.

The First-tier Tribunal (“FTT”) hadfound that Alabaster, as a commercialentity in its own right, was the entitymaking the supplies of loan broking andreceiving the advertising services. As Ala-baster was a Jersey-based company, thesupplies of advertising made to it felloutside the scope of UK VAT. The factthat Ocean Finance also indirectly ben-efitted from the supplies did not alter theFTT’s conclusion on this point. Further,the FTT held that though the aim of thestructure was to obtain a tax advantage, itdid not go against the purpose of theDirective and was therefore not abusive.

HMRC appealed to the Upper Tribunal(“UT”), who subsequently referred anumber of questions to the CJEU. Theseessentially asked the following.

1 What weight should be given to thecontracts when determining therecipient of a supply?

2 If the contractual position is not deci-sive, when should a national courtdepart from this?

3 If the contractual analysis does resultin a tax advantage and is contrary tothe purpose of the Sixth Directive andthe abuse of law principle, how shouldthese arrangements bere-characterised?

The CJEU went straight to judgment inthis case and gave the following guidance.

1 Contractual terms are a factor to takeinto account when looking to identifythe supplier and the recipient, but arenot definitive.

2 It is up to the national court in eachindividual case to determine whetherthese contracts reflect an artificialarrangement and whether they have

been set up with the sole aim ofobtaining a tax advantage.

3 If the national court considers that thecontracts do not reflect reality, theycan be disregarded when identifyingthe supplier and recipient.

4 If the contract terms are disregarded,the national court can redefine themto represent the reality of the situa-tion, i.e. the national court can “lookthrough” the contract.

Commentary

The CJEU seems to confirm what wasalready commonly understood, namelythat the contractual arrangement isimportant when looking to identify thesupplier and recipient, but is only one of anumber of factors to be considered.Whilst there is no further guidance fromthe CJEU on the concept of abuse of law,the judgment does endorse the principleson the concept of abuse of law as set outin Halifax.

The comments of the CJEU in relation towhen contracts can be disregarded serveto highlight to businesses the importanceof ensuring that contracts reflect eco-nomic reality. Businesses therefore need totake extra care to evidence VAT arrange-ments effectively and consider any struc-tures with an off-shore element.

X BV (C-651/11)

This case concerned (i) whether a disposalof a 30% shareholding in a company couldbe equivalent to a transfer of a goingconcern (“TOGC”); and (ii) whetherinput tax incurred by the transferor onfees relating to its share disposal wasdeductible.

Factual background

X BV (X) held 30% of the shares inanother Dutch company A BV (A). Xprovided management services to A. Theremaining shares in A were held by threeother shareholders. At the end of 1996, allof the shareholders sold their shares to D






Plc. In connection with that sale, Xresigned from A’s Management Board.

In conjunction with the sale of the sharesin A, X incurred various fees upon whichVAT had been charged. X deducted theVAT it incurred.

The Dutch tax authorities challenged thededuction on the basis that the VATincurred by X related to an exempt supplyof its shares in A. X considered that thesupply was equivalent to a TOGC.

The Dutch national court referred severalquestions to the Court of Justice of theEuropean Union (“CJEU”).

1 Whether the disposal of 30% of theshares in a company – to which thetransferor of those shares supplies ser-vices that are subject to VAT – isequivalent to the transfer of (part of) atotality of assets.

2 If the answer to Question 1 is no,whether the disposal is equivalent tothe transfer of (part of) a totality ofassets where the other shareholders,who also supply services that are sub-ject to VAT to the company whoseshares have been disposed of, transferall the other shares in that company tothe same person (almost) at the sametime.

3 If the answer to the second question isalso no, whether the disposal referredto in Question 1 can be regarded asthe transfer of (part of) the undertak-ing taking into account the fact thatthat disposal is closely linked to man-agement activities carried out for thatparticipation.

The CJEU made the following commentsin answering the questions posed by thenational court.

• The CJEU noted that the mere acqui-sition and holding of shares in anundertaking does not amount to aneconomic activity. However, the caseis otherwise where the holding com-pany is directly or indirectly involvedin management which is subject toVAT.

• Shareholders do not own the assets inan undertaking. They only own theshares in that company. Further, in thefacts of the case referred, the transferorhad only a limited amount of thoseshares (30%).

• The mere disposal of shares does notallow the transferee to carry on anindependent activity as the transferor’ssuccessor. Therefore, the transfer of a30% shareholding could not beregarded as a TOGC. As a result ofthis, the transfer of shares in a com-pany could never be regarded asequivalent to a TOGC.

• The CJEU also held that it made nodifference that all of the shareholdershad sold their shares and stated thateach transaction must be assessed indi-vidually and independently. It follows,therefore, that a disposal to a singleperson of all the shares in a companyalso cannot be regarded as equivalentto a TOGC.

• The CJEU did, however, note that themanagement activities could havebeen transferred as a TOGC if theyconsisted of an autonomous undertak-ing which could be operated sepa-rately by the transferee and for whichthe transferee paid separateconsideration. Even if this were thecase, however, the TOGC could onlyextend to the assets used for the pur-poses of the management activitiesand not the disposal of the shares. Inthis case, as A’s management activitiesceased immediately upon the sale ofthe shares there was not, on the facts,a TOGC of its management business.

• The CJEU went on to explain that, ifthe supply of shares was exempt, thenit was necessary to establish which ofthe input tax would be directly attrib-utable to that exempt supply. In thisregard, the CJEU confirmed that adirect and immediate link will existwhere the cost of the services onwhich the input tax was incurred isincorporated into the cost of theexempt supply of shares.






Commentary

This follows a long line of case lawaddressing the VAT recovery position ondeal fees incurred in relation to a sharesale and is unlikely to be the last word onthe subject. The case has not thrown amuch light on the circumstances in whichthe principle set down in ABSKF (that atransfer of shares can be equivalent to aTOGC) will apply and as such the scopeand applicability of that principle remainsunclear. In this respect, it can be notedthat CJEU did not address whether theprinciple could apply to a transfer of100% of a shareholding from one singleperson to another single person. It seemslikely that this point will be the subject offurther litigation to come, as well as whatit means for an input cost to be “incorpo-rated” into the price of the shares.

Amy Bache & Candice WalkerDeloitte LLP

H2O

Two elements, one molecule

I can remember when I was a VATTrainee with HM Customs and Excise (asthey then were). One of the trainers madea lasting impression on me when heinvited us all to look out of the windowfrom the 14th floor of a high rise officeblock in Leeds (not something we werenormally encouraged to do as CivilServants). He declared that almost every-thing we could see from that window(other than the natural features of thelandscape such as the land itself and thesky) were there as a result of transactions(or in a VAT vernacular, they were thereas a result of supplies of goods or services).The analysis, of course, is blindingly obvi-ous but is as true today as it was then.Anyone looking out of the window dur-ing working hours nowadays would, how-ever, probably be disciplined so it is notrecommended. The point of recalling thatevent is to set the background. Millions ofsupplies are undertaken on a daily basis

and, from a VAT point of view, the vastmajority of them are prettystraightforward. A supplies X to B inreturn for consideration. X can be goodsor services and, unless we can find azero-rating, a reduced rating or anexemption for the supply of X, VAT ischargeable at the standard rate. Whatcould be more simple?

It seems that my plea for simplicity (seemy article entitled “Better than filing bitsof paper” DVITI issue 190 March 2012)has, however, fallen on deaf ears! (or,more likely, perhaps the plea was a littlenaïve). If only all supplies were so simpleto analyse! The old chestnut of compoundor multiple supplies makes it very difficultfor suppliers to classify their supplies cor-rectly and a recent case has brought theproblem back into sharp focus.

What’s the issue?

As we often do (far too often really if mywaistline is anything to go by), my wifeand I will eat out at our favourite restau-rant (The Epworth Tap in Epworth,North Lincolnshire (for anyone who maybe interested)). A step by step analysis ofthe goods and services we receive fromthe moment we walk in to the restaurantgoes something like this. Entering thepremises, it could be argued that we aregranted some kind of license (a service).When we order a pre-dinner drink fromthe bar, we are supplied with a mixture ofthe services of the barman and with thegoods (the drink). The waitress takes ourorder and the chef cooks the meal (bothservices) and when the meal arrives, weare again supplied with both services (theserving) and with goods (the food (andexceptionally good food it is)). We order abottle of wine (goods) and, at the end ofthe meal we settle our bill and the propri-etor orders our taxi (services). In my view,nobody in their right mind could success-fully argue that we had received the vari-ous supplies (of goods and services) asseparate supplies. A correct analysis mustbe that we have received a single supply ofa restaurant meal and that the variouselements, whilst clearly capable of being






supplied in their own right, are simplycomponents that help us to enjoy themain or principal supply of the restaurantmeal.

From a VAT perspective, it would be anabsolute nightmare (if not impossible) ifevery element of a supply had to beisolated and taxed separately. Much betterthat there is a single supply and we onlyhave to work out the VAT liability once!Or so you would have thought.

Middle Temple

In a recent case – The Honourable Society ofMiddle Temple [2013] UKUT 0250 (here-after Middle Temple) – the issue waswhether there was a single supply of aninterest in land (including supplies ofwater) by the landlord to the tenants orwhether, in fact, there were two separatesupplies. For historical reasons, supplies ofwater were made by Thames Water toMiddle Temple which were metered butMiddle Temple’s supply of water to ten-ants under the lease was unmetered andcharged for on the basis of floor spaceoccupied by the particular tenant and notthe quantity of water consumed. MiddleTemple had opted to tax the particularproperty and, as a consequence its supplyof land (the rent) was subject to VAT atthe standard rate. However, as a separatesupply of water can be zero-rated, this washow Middle Temple had classified thatsupply. HMRC contended that, in fact,there was a single supply of the interest inthe land (which included water) and that,as a result, there was a single compositesupply and VAT was due on the elementof the single supply that Middle Templehad treated as zero-rated.

The First-tier Tribunal (“FTT”) con-cluded that, on the facts, there were twodistinct and separate supplies and not asingle supply. The packaging of the waterand the premises in a single contract didnot result in either service losing itsidentity. Indeed, at paragraph 54 of theFTT’s decision it concluded that ‘The factthat two supplies are provided under one

contract is not conclusive of a compositesingle supply being made’.

However, the Upper Tribunal disagreedand, referring to the now extensive caselaw of the Court of Justice, (includingCard Protection Plan (C-349/96), Levob(C-41/04), Deutsche Bank (C-44/11),Tellmer (C-572/07), Purple Parking(C117/11), and Field Fisher Waterhouse(C-392/11)), it set out what it consideredto be 12 key principles for determiningwhether a particular transaction should beregarded as a single composite supply or asseveral independent supplies. These prin-ciples bear repetition.

1 Every supply must normally beregarded as distinct and independent,although a supply which comprises asingle transaction from an economicpoint of view should not be artificiallysplit.

2 The essential features or characteristicelements of a transaction must beexamined in order to determinewhether, from the point of view of atypical consumer, the supplies consti-tute several distinct principal suppliesor a single economic supply.

3 All cases are different and there cannever be an absolute rule so, in everytransaction, all of the circumstancesmust be considered.

4 Formally distinct services, whichcould be supplied separately, must beconsidered to be a single transaction ifthey are not independent.

5 There is a single supply where two ormore elements are so closely linkedthat they form a single indivisibleeconomic supply which it would beartificial to split.

6 In order for different elements to forma single economic supply which itwould be artificial to split, they must,from the point of view of a typicalconsumer, be equally inseparable andindispensable.

7 The fact that, in other circumstances,the different elements can be or aresupplied separately by a third party isirrelevant.






8 There is also a single supply whereone or more elements are to beregarded as constituting the principalservices, while one or more elementsare to be regarded as ancillary serviceswhich share the same tax treatment ofthe principal element.

9 A service must be regarded as ancillaryif it does not constitute for the cus-tomer an aim in itself, but is a meansof better enjoying the principal ser-vice supplied.

10 The ability of the customer to choosewhether or not to be supplied with anelement is an important factor indetermining whether there is a singlesupply or several independent sup-plies, although it is not decisive, andthere must be a genuine freedom tochoose which reflects the economicreality of the arrangements betweenthe parties.

11 Separate invoicing and pricing, if itreflects the interests of the parties,support the view that the elements areindependent supplies, without beingdecisive.

12 A single supply consisting of severalelements is not automatically similarto the supply of those elements sepa-rately and so different tax treatmentdoes not necessarily offend the princi-ple of fiscal neutrality.

Whilst there will, undoubtedly, be somethat will consider that this list is incom-plete, in my view, the Upper Tribunal’ssummary of the 12 principles provides afantastic starting point for those of us whoare tasked with analysing such matters.Applying those principles to the facts inthe Middle Temple case, the Upper Tribu-nal concluded that The First-tier Tribunalhad erred in law when it ruled that thesupply of the premises and the supply ofthe water were separate supplies.

In essence, Middle Temple provides theright to occupy the premises and, throughan accident of history, also provides coldwater to the tenants. This is somewhatunusual. However, having acknowledgedthat the two separate elements (premisesand water) may be supplied separately in

other circumstances, it was clear that, inthis case, the tenants had no choice but toobtain water from Middle Temple. Asboth the premises and the water are essen-tial if the tenants are to occupy and usethe premises, the Upper Tribunal con-cluded that it had to be assumed that thetenants required a combination of thosetwo elements if the premises were to fulfiltheir economic purpose. If that assump-tion was correct, then it followed that theleasing of the premises and the supply ofthe water to the premises under the termsof the lease form a single economic supplywhich it would be artificial to splitbecause, from the point of view of thetypical tenant, both the premises and thewater are equally indispensable andinseparable.

The First-tier Tribunal had accepted thatwater was an indispensable element of thesupply when it found that it was requiredfor human life and that the lease of thepremises would not have any practicalutility without the water. Equally, a supplyof water on its own would be pointlesswithout the premises. Both are required ifthe tenant is to occupy and use the prem-ises and, as a result, applying the analysisof the CJEU in Deutsche Bank, the UpperTribunal concluded that the provision ofthe two elements is an indivisible supplywhich it would be artificial to split. Theelements are not only inseparable but areindispensable and must be considered tobe so closely linked that they form, objec-tively, a single indivisible economicsupply.

Now, I am no scientist, but with all of thistalk about elements, it seems to me thatwhen undertaking any kind of analysis inrelation to whether there is a single ormultiple supply, it would be useful to keepthis case in mind. The case is, partly, aboutwater. From memory (and it is many yearssince I did my O levels), a water moleculeis made up of two elements. There aretwo Hydrogen atoms and an Oxygenatom. Hydrogen on its own is one thing,Oxygen on its own is another but, bycombining the two elements together inthe correct proportions, something






entirely different is created. One instinc-tively knows water when one sees it andone could never split the two elementsand still call it water.You would simply beleft with two distinct separate elementsthat are most definitely not water.

The answer to the question of whetherthere is a single or multiple supply iscomplex. To get to an answer not onlyshould the 12 principles outlined by theUpper Tribunal be considered but perhapsit may also be useful to use the chemicalanalogy too. Just as it would be artificial toseparate out all of the goods and serviceswhich go together to form a restaurantmeal, it would equally be artificial whensupplying water to say that what wasbeing supplied was Hydrogen and Oxy-gen!

Graham C Brearley LLB(Hons)Grant Thornton UK LLP

LAND-RELATED SERVICES

A definition

In anticipation of the European Court ofJustice (“ECJ”) judgement in the case ofMinister Finansow v RR Donnelley GlobalTurnkey Solutions Poland Sp. Z.o.o.(C-155/12), set out below are the latestthoughts on a most needed definition ofwhat is a service connected with immov-able property, or as we term in the UK, aland related service.

Legislative position

A comprehensive definition of servicesrelated to land is important as this type ofservice is one of the exceptions to thegeneral place of supply rule, being subjectto tax in the deemed place of consump-tion – where the land is situated.

At Article 47 of the Principal VAT Direc-tive 2006/112/EC, it states that:

“The place of supply of services con-nected with immovable property,including the services of experts and

estate agents, the provision of accom-modation in the hotel sector or insectors with similar function, such asholiday camps or sites developed foruse as camping sites, the granting ofrights to use immovable property andservices for the preparation and coor-dination of construction work, such asthe services of architects and of firmsproviding on-site supervision, shall bethe place where the immovable prop-erty is located.”

Despite the rather lengthy descriptioncontained in the Principal VAT Directive,the precise scope of what is within theterm “service connected with immovableproperty” and what is not is not entirelyclear.

It is recognised that the lack of clarityleads to the risk of double taxation onsupplies of certain types of services; oneMember State could view a service asfalling under Article 47 and as taxable intheir EU Member State, whilst anotherEU Member State may see the sameservice as falling under Article 44, thegeneral rule. In the case of a B2B trans-action a Member State with this interpre-tation could require the purchaser of suchservices to account for the reverse chargeon the same transaction, thus leading tothe potential for VAT being accounted forin both the supplier’s and the recipient’sMember States. Conversely the other fauxpas of European VAT principles couldoccur, that of non taxation. As a result amore clear definition or set of guidelinesis essential in order to avoid conflictinginterpretations between Member States.

European case law

At a European level the only other aid tointerpretation comes from ECJ case lawand to date the best we have is theconcept of “sufficiently direct connec-tion” which was established probablymost notably in the case of HegerRudi GmbH v Finanzamt Graz-Stadt(C-166/05). This concept states that onlysupplies of services which have a suffi-ciently direct connection with immovable






property fall within Article 47. But that iswhere the guidance ends since all subse-quent cases considering services con-nected with immovable property havebeen decided by the ECJ on the veryspecific facts of each case.

The UK interpretation

The implementation of Article 47 intoUK law can be found at Schedule 4A,Paragraph 1, VAT Act 1994. This takes thebasics of Article 47 but splits the includedservices into six distinct types of servicesset out below in simplified form.

• Supplies of interests in or rights overland.

• Supplies of rights to call for or begranted an interest in or right overland.

• Granting of licences to occupy landincluding within holidayaccommodation.

• Provision of hotel accommodation,etc.

• Construction works and other worksundertaken to buildings

• Services such as are supplied by estateagents, auctioneers, architects, survey-ors, engineers and others involved inmatters relating to land.

It is this final category which in my viewresults in the most scope for conflict inthe UK; the inclusion of “other involvedin matters relating to land”, the other fivecategories do appear to be quite tightlyscoped.

UK guidance in the Place of SupplyNotice 741A does not provide muchassistance with regard to what the termland related service means. In addition tothe staple “sufficiently direct connection”definition, the Notice merely provides alist of examples of what is included andwhat is outside HMRC’s interpretation ofthe legislation. This is fine if the servicesin question are of a nature wholly withinone of the examples. However, as we areaware real life situations very rarely fallneatly into a finite list of examples.

HMRC has relatively recently taken stepsto make the UK position clearer andfollowing discussions on this topic at EUlevel it issued Revenue & Customs Brief22/2012. This outlined changes toHMRC’s policy in relation to three spe-cific types of services.

• Space at exhibitions and conferences –the new policy is if the supply is of aspecific stand, the supply is deemed tobe a supply of land and as such landrelated services. However, if there areaccompanying services as part of apackage, the supply is to be taxedunder the general place of supply rule.

• Storage of goods – the old policy wasto see all supplies of storage space asland related services; however this willnow only be the case if the suppliergrants a recipient the right to use aspecific area of a warehouse for exclu-sive use of the customer to storegoods. It should be noted that this isthe service type akin to the one atissue in the case of RR Donnelly(which is discussed below); thereforeit will be very interesting to see if theECJ ultimately agrees.

• Airport lounges – the new policy is toview a supply of access to airportlounges as a land related service.

More importantly however, HMRC alsotook the opportunity to add to the term“sufficiently direct connection”. From aUK perspective services with a sufficientlydirect connection with a specific piece ofland will include:

• services derived from land and wherethe land is a central and essential partof the service; and

• services intended to legally or physi-cally alter a property.

The UK guidance, although providingmore clarification on the UK interpreta-tion, still does not help the real issue ofconflicting European views and only alegislative change at EU level or ECJ caselaw will bind all Member States.






Guidelines of the AdvisoryCommittee on Value Added Tax

The discussions undertaken at EU levelon this issue as referred to above, mayrelate to the guidelines released by theAdvisory Committee on Value Added Tax,hereafter referred to as “the VATCommittee”. Following the 93rd Meetingof the VAT Committee on 1 July 2011,the VAT Committee issued guidelines onthe scope of the place of supply rulegoverning services connected withimmovable property (Document A –taxud.c.1(2012)400557 – 707).

In addition to the VAT Committee beingof the unanimous view that services con-nected with immovable property underArticle 47 of the VAT Directive shouldonly include services that have a suffi-ciently direct connection with that prop-erty, it similarly to the UK, opted toprovide its views on a specific examplesbasis rather than providing any new defi-nition or principles.

It should be noted that the VAT Commit-tee are merely a consultative committeeand the document caveats that their viewsare not an official interpretation of theEuropean law and are not necessarilyagreed by the European Commission. Inother words these guidelines are not bind-ing on any Member States.

AG’s opinion in RR Donnelly(C-155/12)

The reference of the RR Donnelly caseto the ECJ has provided real opportunityfor the European Court to provide adefinitive definition or set of principlesonce and for all. Indeed Advocate GeneralKokott commented in his opinionreleased on 31 January 2013 that this case“provides a good opportunity to set out moreprecisely the Court’s case-law on the placewhere a service in connection with immovableproperty is supplied. Going beyond the indi-vidual case, clarity should be provided, for thepurposes of application of the law, as to whatthe Court understands by a ‘sufficiently direct’connection”.

The case of RR Donnelly concerns, theactivities of a Polish company which isengaged in the provision of storing goodsfor customers established in other EUMember States. Its services go beyondsimple storage however and includeadmitting goods into the warehouse, plac-ing goods on storage shelves, storing thegoods, packaging the goods for the cus-tomer, issuing the goods and unloadingand loading activities.

The Polish tax authorities were of theopinion that these services were servicesconnected with immovable property andsince the warehouse was located inPoland, the services should be taxed inPoland. RR Donnelly took a differentview and considered that its services fellwithin the place of supply general rule atArticle 44 and as such should be subjectto tax in the EU customer’s MemberState. The specific question of whetherthe services listed above (described ascomplex services) constituted servicesconnected with immovable property andas such fell into the provisions of Arti-cle 47 was therefore referred by the Polishcourts to the ECJ

The AG concluded that the complex ser-vices in question were a single supply ofservices for VAT purposes for which theprincipal service was the storage of goods.The AG then set out the following prin-ciples on whether a service falls withinthe scope of Article 47.

1 It is not sufficient for any land orproperty to be required for the perfor-mance of the service, it must be spe-cific land or property identified by theparties to the transaction.

2 The specific land or property must bethe subject matter of the service, inother words the land or property mustbe the object of the supply.

3 The services explicitly listed in Arti-cle 47 are a guide to interpretationand using that list it is possible todetermine when the immovable prop-erty is the subject matter of a service.

4 The immovable property is the subjectmatter of a service when it is:






• used by the customer;• when work is carried out on it; or• when it is assessed.

5 Two services listed in Article 47 donot fall within the three above catego-ries – estate agents and the preparationof construction work. These servicesdo not have the immovable propertyas the subject matter but rather thecontract for the purchase of immov-able property or the planning docu-ments for the work to carried out onthe property. The inclusion of theseservices in Article 47 serves to extendthe application of the rule for thepurposes of simplification for theseservices only.

A possible definition?

In answering the question referred by thePolish court, the AG stated that:

“Application of Article 47… requires thatthe subject matter of the service be the useof, work on or assessment of specificimmovable property or that the service beexplicitly listed in that provision.”

Consequently in terms of whether storageservices fell within this definition – theAG concluded that such a service wouldonly fulfil the requirements if the storageof goods is the principal service and it isconnected with a right to use specificimmovable property or a specific part ofsuch property. This is entirely in line withthe new policy announced by HMRC inRevenue & Customs Brief 22/12.

In my view this potential definition wouldbe a significant improvement on what wehave at the moment. Let us hope that theECJ chooses to adopt it in its judgementso that harmony across Europe can beachieved at last (well, at least when itcomes to the place of taxation of landrelated services).

Jade HallBDO LLP

CUSTOMS

Update on reforms to theEU’s Generalised System ofPreferences

Further to our article “Reforming the Gen-eralised System of Preferences: EU RefocusesTrade Priorities in Favour of Poorer Coun-tries”, dated 1 January 2013 and circulatedby this publication, we provide an updateon: the countries that are set to lose GSPbeneficiary status from 1 January 2014;the status of the Free Trade Agreements(“FTAs”) currently under negotiationwith a number of these countries;Myanmar/Burma’s reinstatement in theGSP; and the effects of the reformed GSPon regional cumulation (ie the systemwhich allows products originating in onecountry to be treated as originating inanother country within the same regionalgroup).

By way of background, the new GSPregulation (Council Regulation (EU)978/2012 Council Regulation (EU)978/2012 applying a scheme of general-ised tariff preferences and repealingCouncil Regulation (EC) No 732/2008:http://trade.ec.europa.eu/doclib/docs/2012/october/tradoc_150025.pdf) pro-vides for new tariff preferences to applyfrom 1 January 2014. The existing prefer-ences will continue to apply until31 December 2013 (Pursuant to CouncilRegulation (EC) No 732/2008, asextended by Council Regulation (EC)No 512/2011).

Change in the number of countriesto benefit from GSP

As of 1 January 2014, the number of GSPbeneficiaries will be reduced from 176 to89 in order to “focus the GSP preferences onthe countries most in need” (European Com-mission, 2011), specifically least developedcountries (LDCs) and other poor econo-mies with no preferential market accessarrangement to the EU market. We setout below the countries that are to beexcluded from the GSP.






• Thirty-three Overseas Countries andTerritories that already benefit from aspecial market access arrangementwith the EU or belong to developedcountries. The impact on these coun-tries is, therefore, expected to beneutral.Anguilla, Netherlands Antilles, Antarctica,American Samoa, Aruba, Bermuda, Bou-vet Island, Cocos Islands, ChristmasIslands, Falkland Islands, Gibraltar, Green-land, South Georgia and South SandwichIslands, Guam, Heard Island and McDon-ald Islands, British Indian OceanTerritory,Cayman Islands, Northern MarianaIslands, Montserrat, New Caledonia, Nor-folk Island, French Polynesia, St Pierreand Miquelon, Pitcairn, Saint Helena,Turks and Caicos Islands, French SouthernTerritories, Tokelau, United States MinorOutlying Islands,Virgin Islands – British,Virgin Islands – US,Wallis and Futuna,and Mayotte.

• Thirty-four Partners that already havealternative market access arrangementswith the EU, such as bilateral FTAs.The impact on these countries is alsoexpected to be neutral.Euromed (6): Algeria, Egypt, Jordan,Lebanon, Morocco and Tunisia.Cariforum (14): Belize, St. Kitts andNevis, Bahamas, Dominican Republic,Antigua and Barbuda, Dominica, Jamaica,Saint Lucia, Saint-Vincent and the Gren-adines, Barbados, Trinidad and Tobago,Grenada, Guyana and Surinam.Economic Partnership AgreementMarket Access Regulation (12): Côted’Ivoire, Ghana, Cameroon, Kenya, Sey-chelles, Mauritius, Zimbabwe, Namibia,Botswana, Swaziland, Papua NewGuinea and Fiji.FTAs (2): Mexico and South Africa.

• Twenty-two countries and territoriesthat have been classified as ‘high-income’ or ‘upper-middle income’economies by the World Bank’s percapita income classification for the lastthree consecutive years (http://data.worldbank.org/about/country-classifications/country-and-lending-groups).

High-income countries (7): Saudi Ara-bia, Kuwait, Bahrain, Qatar, United ArabEmirates, Oman and Brunei Darussalam.High-income territory (1): Macao.Upper-middle income countries(UMIs) (12):

Latin America (5): Argentina, Bra-zil, Cuba, Uruguay and Venezuela.Ex-USSR (3): Belarus, Kazakhstanand Russia.Other (4): Gabon, Libya, Malaysiaand Palau.

In addition, Azerbaijan and Iran willno longer be eligible for GSP as of22 February 2014 following their clas-sification by the World Bank as upper-middle income countries for a thirdconsecutive year in July 2012 (http://data.worldbank.org/about/country-classifications/country-and-lending-groups).

All 176 countries (including those set tolose GSP beneficiary status) will, however,remain “eligible” for reinstatement as“beneficiary” countries. For example, ifthey cease to meet the relevant incomethresholds or to benefit from a preferentialmarket access arrangement.

Status of FTA negotiations withcountries set to lose GSP status

A number of the countries and the tradeblocs comprising countries that are set tolose GSP beneficiary status from 1 January2014 are at various stages of negotiatingbilateral or regional FTAs with the EU.We provide below an update on the statusof these negotiations.

• Negotiations with the Gulf Coop-eration Council (GCC), comprisingthe recently-upgraded high-incomecountries of Bahrain, Kuwait,Oman, Qatar, Saudi Arabia andUnited Arab Emirates, were sus-pended by the GCC in 2010. How-ever, the EU is understood to remaincommitted to concluding an FTAwith the GCC and informal consulta-tions between the EU and GCC chiefnegotiators continue to take place (the






next EU-GCC ministerial meetingunderstood to be taking place on1 July 2013). Notably, the loss of GSPstatus will mean that the GCC coun-tries will become subject to a 4.7%duty on jet fuel imported into the EUfrom the region from 1 January 2014.It is anticipated that this may promptthe renewal of the FTA negotiations.

• In February 2011, the EU suspendednegotiations for an EU-Libya Frame-work Agreement as a result of theconflict (Libya and Syria remain theonly Mediterranean countries not tohave concluded FTAs with the EU).

• The EU’s long-standing and on-goingnegotiations with the MERCOSUR(El Mercado Común del Sur) bloc,comprising Argentina, Brazil, Para-guay, Uruguay and Venezuela, havereceived renewed impetus. In January,it was agreed that market access offerson customs duties and quotas wouldbe exchanged by no later than the lastquarter of 2013 in time for discussionat a formal negotiating round inNovember 2013.

• The EU’s negotiations with Malaysia,the second ASEAN FTA to be nego-tiated, were postponed due to Malay-sia’s domestic elections in early May2013. It is anticipated that negotia-tions will resume before the end of2013.

• Progress on negotiations for Deep andComprehensive Free Trade AreaAgreements (DCFTAs) with each ofEgypt, Jordan, Morocco and Tuni-sia has been varied. Each of thesecountries have existing Euro-Mediterranean Association Agree-ments with the EU that provide forduty-free imports of most productsinto the EU. In response to the ArabSpring, the DCFTAs are intended tobuild on these agreements to ensurecloser integration between the econo-mies of these countries and the EUSingle Market. Negotiations are mostadvanced with Morocco (a first roundof negotiations took place in April2013). By contrast, there has been noreported progress with Tunisia,

exploratory discussions took placewith Egypt in November 2012 and ascoping exercise was launched inMarch 2012 to assess Jordan’s readinessto start DCFTA negotiations.

Reinstatement of Myanmar/Burma

On 12 June 2013, the Irish Presidency ofthe EU announced that the EU hadco-signed the relevant legislation thatwould result in Myanmar/Burma’s rein-statement in GSP, following the tempo-rary withdrawal of its access to GSP in1997 as a result of serious and systematicpractices of forced labour. At the time ofwriting this article, the relevant regulationwas awaiting publication in the EU’s Offi-cial Journal (we understand the regulationwill be published at the end of July 2013).It will take effect 20 days after publicationand applyretrospectively from 13 June2012.

Myanmar/Burma is a beneficiary of theGSP’s special “Everything but Arms”(EBA) scheme for LDCs. Such countriesbenefit from full duty-free, quota-freeaccess to the EU market for all “originat-ing” products, except arms andammunition. Companies that haveimported such products into the EU onor after 13 June 2012 should considerfiling a refund claim for any duties paidwith the relevant EU customs authorityfollowing the regulation’s entry into force.

Impact of these changes on regionalcumulation for GSP countries

Amendments to the GSP rules of originare expected to be published before thesummer break, which will reflect thereformed GSP. The GSP’s distinctionbetween “eligible” and “beneficiary”countries will be reflected in the rules oforigin: on import into the EU, preferen-tial treatment and thus the rules of originwill be applied to GSP beneficiaries only.Regional cumulation will be available forGSP beneficiaries only, which will resultin changes to the existing CumulationGroups I, II and IV, as summarised below.






Table BCumu-lationGroup

Existing Members Impact of GSPReforms

Group I BruneiDarussalam,Cambodia,Indonesia, Laos,Malaysia,Philippines,Singapore,Thailand andVietnam

Myanmar/Burmato join (being amember ofASEAN)Brunei andMalaysia will nolonger be inGroup I due tobeing removedfrom the list ofGSP beneficiariesSingapore will nolonger be amember (therebeing noequivalent toArticle 5(3) ofRegulation 732/2008 in the newGSP)

GroupII

Bolivia,Colombia, CostaRica, Ecuador, ElSalvador,Guatemala,Honduras,Panama, Peru,Nicaragua andVenezuela

Venezuela will nolonger be inGroup II due tobeing removedfrom the list ofGSP beneficiaries

GroupIII

Bangladesh,Bhutan, India,Maldives, Nepal,Pakistan and SriLanka

No change

GroupIV

Argentina, Brazil,Paraguay andUruguay

Argentina, Braziland Uruguay willno longer be inGroup I due tobeing removedfrom the list ofGSP beneficiariesGroup IV willconsist of onemember only(Paraguay), whichin practice willeffectively bringGroup IV (as itcurrently stands)to an end

While the new preferences apply from1 January 2014, for goods in transition,the principles of general customs legis-lation will apply (i.e., the regime to applywill be the one that is applicable at themoment of acceptance of the customsimport declaration). The impact of theloss of GSP beneficiary status will be as

follows: goods originating in a GSP ben-eficiary country that leave the countryprior to the date of application of the newGSP regime, but which are customs-cleared in the EU on or after 1 January2014, will not benefit from GSP prefer-ences if the country has lost its GSPbeneficiary status as of 1 January 2014.

Conclusion

Those currently relying on GSP shouldconsider the impact of the new GSPregime on their supply chain from 1 Janu-ary 2014 and in the future, and planappropriately. The impact that loss of GSPstatus may have on profit margins shouldbe assessed, as well as sourcing materialsand/or products from other jurisdictionsthat will continue to benefit from GSP ora preferential market access arrangement,such as an FTA.

Under the new GSP, the list of beneficiarycountries will not remain static. Forexample, as highlighted above, any coun-try that completes three consecutive yearsas a high-income or upper-middleincome economy will cease to benefitfrom GSP beneficiary status and lose theirpreferential tariffs. While we are currentlyawaiting the publication of the WorldBank’s country income classification table,examples of countries that this may applyto include: China; Colombia; Costa Rica;Ecuador; Equatorial Guinea; Jordan; Mal-dives; Panama; Peru; Thailand; andTunisia.

If the European Commission decides toremove a country’s GSP beneficiary status,a transitional period will be applied toallow traders to adopt to the changes. Forthose countries that have completed threeconsecutive years as a high-income orupper-middle income economies, the lossof tariff preferences will apply from oneyear after the date of the entry into forceof the relevant Commission delegated act.If a preferential market access arrangementis applied (even on a provisional basis), thechanges will apply from two years afterthe date of application of thearrangement.






Companies that currently claim GSP pref-erence for their imports should closelymonitor these changes so as to be aware atthe earliest opportunity. It will then bevital to ensure that this information isdisseminated at an early stage to the

appropriate parts of the business, such asthe procurement and supply chaindivisions.

Alexandra DemperBaker & McKenzie LLP






CONTRIBUTORSDavid Rudling and Alan DoltonLexisNexisMarc WelbyBDO LLPJade HallBDO LLPMitchell MossErnst & Young

Alexander DempsterBaker & Mckenzie LLP

Amy Bache & Candice WalkerDeloitte LLP

Graham C BrearleyGrant Thornton UK LLP

Subscription enquiriesLexisNexis Customer ServicesTel: +44 (0)84 5370 1234Email: [email protected]

EXECUTIVE EDITOR

Marc WelbyBDO LLP

Assistant Editors

Graham ElliottWithers Worldwide

John DavisonIndependent Indirect Taxconsultant

SPECIALIST EDITOR

Giles SalmondDeloitte LLP

Editorial enquiriesHalsbury House35 Chancery LaneLondon WC2A 1ELCommissioning:Tanya CampbellTechnical: David RudlingProduction:Tanya Campbell

The data contained in this publication is intended to be a general guideand cannot be a substitute for professional advice. Neither the author(s)nor the publisher accept responsibility for loss occassioned to any personacting or refraining from acting as a result of material contained in thispublication. This is a Butterworths’ publication.

Printed and bound in Great Britain by Hobbs the Printers Ltd, Totton,Hampshire

Published 12 times per year: £476

Copyright Reed Elsevier (UK) Ltd 2013

ISSN 1363–9560

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ISSN 1363-9560





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