News & Articles


Monthly VAT update: December 2023


Our monthly round-up of the latest VAT news.

Autumn Statement

For VAT, the main announcements in this year’s Autumn Statement were the extension of the zero-rate for certain feminine hygiene products and the extension of the zero-rating for energy saving materials (both in terms of technology that it will apply to and the types of buildings they are used in). The latter will have further information issued ‘soon’.

Missing returns

The CIOT has reported that HMRC are sending out letters to businesses with missing VAT returns asking for them to be submitted and paid or if the business has ceased trading for them to de-register. If you receive one of these please don’t assume they are right and check your VAT account online.

Mind the gap

A taxpayer called GAP Group provided diggers, dumpers and excavators for hire. Diesel powered plant was delivered with a full tax and expected to be returned with a full tank. If not, there was a separate charge (at a premium) for the diesel required to fill the tank. The First Tier Tribunal has ruled that the supply of this diesel was a separate supply. This was important as, up to April 2022 the supply of this fuel qualified for the reduced rate of 5%, so by treating it as part of the hire there would have been an over-declaration of VAT.

The wheels of justice

Turn slowly. This Upper Tribunal case relates to claims by a car dealer for VAT overdeclared on the sale of demonstrator cars going back to 1973. For those in the sector with long memories this was a claim that the ‘Italian Tables’ (a formula used to calculate the true amount of VAT due on a sale) were incorrect and therefore an additional claim was payable. HMRC argued that although there was a new claim it had nothing “new to say” and therefore was not repayable. The Upper Tier agreed that the claim was not payable and it was dismissed. 

Culture in Derby

The Quad in Derby showed live transmissions of Shakespeare from the RSC’s Stratford-Upon-Avon theatre. These were seen to be the next best thing to attending the theatre and were an event in itself.

The tickets sold for attending the theatre are an exempt supply due to the cultural exemption for live events. Cinema tickets are usually standard rated as there is no live element.

The Quad took the view that the tickets for a live streaming of a cultural event could also be exempt. The first tier Tribunal ruled that that the actors on the stage received no response or energy from the Quad attendees and as such the event failed to qualify for exemption.

It seems that what is needed is what most professional organisations, line managers and retailers want and musicians rarely do, feedback. 

Lightbulb moment

A utility provider offered a £50 voucher for new customers. They then offered the new customer a further £50 voucher to that new customer, for any further new customers ‘recruited’ (there was a facility to send information to friends and family). HMRC saw the first £50 as a discount against the customer’s electricity bills, but that the additional payments were consideration for a supply of recruiting new customers. This meant that the VAT rate of the first payment was 5% (domestic fuel) and 20% for the additional payments.

Contact lenses online

The taxpayer sold contact lenses online. Their argument was that a proportion of the charge was exempt due to the supply being services of a health professional in guiding the customer to the correct purchase.

The judgment is very fact specific (there was a separate associated company that operated the website and sold the lenses with another company providing the dispensing services. The latter company was challenged by HMRC on the grounds it was not offering professional health care by the relevant qualified personnel. The Tribunal agreed with HMRC that the online provision was such that there was not an element of healthcare, so the whole of the fee was subject to VAT at 20%.

As this is the last VAT news of 2023, we wish every reader a happy holiday and a healthy and prosperous 2024.

Get in touch

If you would like to discuss any of these VAT updates in more detail, please contact Ian Marrow via 

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