interest payable following Hungarian investigation – CJEU In September 2011, Glencore
Agriculture Hungary Kft. claimed input tax of EUR 12.4m from the Hungarian
tax authorities ("HTA"). The HTA investigated the claim, requested
a large amount of data from Glencore, and within a few weeks imposed penalties
for failure to provide it. Two years later, in November 2013, the HTA finally
repaid EUR 5.9m. It appears that Glencore's contribution to the delay in
completing the investigation was relatively trivial, and in those circumstances
CJEU has decided
that Hungarian rules limiting interest to a period following the formal
completion of the investigation (applicable where fines have been imposed)
infringed the principle of fiscal neutrality. The Court concluded that,
although a repayment might be delayed pending investigation, a taxpayer
should be entitled to interest if the investigation took too long. To discuss
the case please contact Mark
020 7303 8102.
interest hearing – Supreme Court The Supreme Court has
considered two of the issues arising in Littlewoods’
compound interest appeal.
The first issue concerned whether s.78 VATA (interest) should be read together
with s.80 VATA (output tax claims) as a coherent tax code, meaning that
restitutionary claims for compound interest are prevented by statute. The
Supreme Court has reserved its judgment. A finding in HMRC’s favour would
mean that Littlewoods has to establish that payment of simple interest
is contrary to EU law, in order for its claim to have any chance of success.
Detailed arguments from the parties on this second issue, in particular
on the meaning of “adequate indemnity”, led the Supreme Court to ask
whether another reference to the CJEU was required. The parties were in
agreement that, if the Court was minded to refer the matter to Europe,
there was no point in considering the other issues. The Supreme Court normally
takes around 3 months to deliver its judgment, although the summer recess
and the possibility of a reference may impact the timetable. To discuss
the case or its implications, please contact David
Walters on 0113
& Butin: German invoicing rules too restrictive – AGO In a number of recent
decisions, the CJEU has found that irregularities in VAT invoices should
not deny input tax recovery to customers. In RGEX-Geissel
two car dealers in Germany were purchasing cars from suppliers who only
showed letterbox addresses on their invoices. AG Nils Wahl considers that
German rules which require the principal place of business to be shown
on any invoice are too strict: a letterbox address is a valid address for
the purposes of the invoicing rules in the Principal VAT Directive. The
AG recognises that the German tax authorities may have had some doubts
as to whether the suppliers would account for VAT properly, and noted that
input tax recovery can be compromised where a customer “knew or should
have known” that a transaction was connected with fraud. However, this
principle did not allow tax authorities effectively to transfer their investigative
responsibilities to taxpayers. A car dealer cannot be expected to visit
the principal place of business of each supplier, especially when modern
business practices mean that businesses are increasingly mobile. To discuss
the case, please contact Darren
0113 292 1739.
VAT Notes 2017 Issue
2: payable orders to be phased out In VAT
Notes 2017 Issue 2,
HMRC have announced that they will be phasing out repayments by payable
orders. Unless HMRC changes its current practice on overseas bank accounts,
some overseas businesses may in due course need to open UK accounts in
order to receive any refunds.
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