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Avon Cosmetics v HMRC

In Avon Cosmetics v HMRC (Case C-305/16) (7 September 2017) the advocate general considered that the derogation for direct selling (Sixth VAT Directive Art 11(A)(1)(a)) could not be applied with modifications so as to enable the 'Avon ladies' to recover input tax.

Avon sells its beauty products in the UK to representatives known as ‘Avon ladies’ who make retail sales. Many of the Avon ladies are not registered for VAT. This problem of ‘lost VAT’ is typical of direct selling models and HMRC has obtained a derogation allowing it to charge VAT on the retail price. However the way the derogation is applied does not take into account the costs incurred by the Avon ladies in particular on products purchased for demonstration purposes and not for resale. The issue was whether this inability to recover input tax meant that the derogation infringed general principles.


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