Last week HMRC announced their plans for VAT if the UK ends up leaving the EU in March 2019 without a deal. They have emphasised that the government is confident a deal will be reached, but they are introducing contingency plans as a precautionary measure.
HMRC have not been able to finalise their review of salary sacrifice lease cars in the NHS to date, but have recognised the need to address the situation by issuing some interim guidance which should be implemented from the October return.
On 24th March, HMRC released a policy paper confirming that the Prime Minister has secured agreements with other officials at the March European Council to welcome increased flexibility for member states in relation to the zero and reduced rates of VAT. Whilst this was primarily related to the abolition of the ‘tampon tax’ – the increased flexibility could present an opportunity for the UK to reconsider other demands – like the ECJ ruling which suggested that the reduced rate on energy saving materials was in breach of EU laws.
The VAT Mini One Stop Shop (MOSS), introduced in January of this year, currently affects only the supply of digital services to consumers in EU member states. Prior to the introduction of this, there were often multiple registration obligations for UK businesses in other member states. As mentioned, currently MOSS only applies to the supply of digital services, and there is in fact no minimum threshold in place. Supplies of goods are subject to the distance selling rules, in which each member state sets a threshold; once this threshold is breached, the supplier will have an obligation to register locally in that country for VAT. (Distance sales are sales of goods to customers in another EU member state where the customer is not VAT registered, and the seller is responsible for delivery of the goods.)