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Revenue & Customs briefs tackle VAT issues

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HMRC has confirmed, in Revenue & Customs Brief 18/2013: VAT, tax avoidance using offshore entities – ECJ judgment in Newey, that it will continue to investigate what it considers to be artificial contractual relationships established for tax avoidance purposes and look through to the underlying economic reality of transactions. The recent CJEU decision in Newey (t/a Ocean Finance), on a reference from the Upper Tribunal, gave support to the view that contractual terms are not necessarily decisive in the context of the Sixth VAT Directive.

In addition, Revenue & Customs Brief 15/2013: VAT, judgment in Investment Trust Companies and common law claims against HMRC sets out the options for ‘customers’ in the Investment Trust Companies case to make mistake-based claims in restitution against HMRC for output tax wrongly charged, following the High Court judgments given in March 2012 and March 2013. These are not statutory claims under the taxes acts and must be made to the relevant court. Any repayments to ‘customers’ would be linked to a corresponding claim having been made by their ‘suppliers’ under VATA 1994 s 80 within statutory time limits. Both parties have been given leave to appeal to the Court of Appeal.