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UK VAT Newsletter 17 February 2020

02 Mar 2020

We are glad to share the UK VAT newsletter written by our collegue Ian Marrow from Richard Luckin (


UK VAT Newsletter 17 February 2020




At 11pm GMT on 31 January 2020, the UK officially left the European Union. At the same time the “transition period” began. Despite the name effectively very little will change for VAT in this period.


The real changes will take place once the transitional period ends and will depend on what (if any) agreement(s) the UK has with the EU at this time. However, it’s not even certain when this will happen although the UK government has said that it intends for this to be 31 December 2020.


HMRC have withdrawn its on line portal for “Customs, VAT and Excise regulations in a no-deal Brexit” and there are now consultations about the creation of new “freeports” and Most Favoured Nation trading.


The answer’s in the post


Up to 2009 it was assumed, by HM Revenue and Customs, customers and the Royal Mail that postal charges made by the Royal Mail were exempt. However a European case ruled that contracts for mail shots, promotions, etc. which were separately negotiated were standard rated.


Although the UK law has been subsequently amended many customers have sought to recover VAT on pre 2009 supplies even though the Royal Mail believed it was making an exempt supply and did not issue tax invoices.


Two approaches have been taken. The first was to insist that Royal Mail issue tax invoices for these supplies. This case has been rejected by the High Court. The other approach (for the VAT to be recovered without reference to a tax invoice) has reached the UK Supreme Court. Here HMRC has agreed that during the transitional phase (see above) an unclear matter can be referred to the European Court. Such a referral was a duty of the courts before 31 January 2020, but HMRC have not given an opinion as to whether this is still a duty or just an option.


Grants still available


HMRC have announced that grant funding for businesses that complete customs declarations now have until 31 January 2021 to apply for grant funding to help them increase their capacity to do so.

Businesses can get funding for the following:

  • training to assist a business to complete customs declarations and processes
  • IT improvements to assist business complete customs declarations more efficiently

Businesses that want to apply for funding should not contact HMRC, but can apply online at




A couple converted a commercial building into a dwelling intending to use it as their holiday home or permanently relocating. However, due to family issues they decided to stay in their current house and let the property as a holiday home. Although it was let from July 2017 the local authority did not issue a Notification of Acceptance until April 2018. The D-I-Y claim was submitted in May 2018.


HMRC rejected the claim on two counts, firstly that the property was used for business purposes, secondly the claim was out of time, submitted more than three months after the first occupation.


The Tribunal ruled it was the honestly held intention not to use the property for business purposes when it was built. The three most important things for a property are location, location, location, and so it is here. The property was in Scotland. Under Scottish property law it is illegal to live in a building that has not received a Notification of Acceptance. Therefore, the claim was made in time as the legal completion of the building occurred in April 2018.


Ian Marrow