Weekly VAT News

We are delighted to invite you to join us for our webinar in conjunction with Vertex on 28 January, 14:00 – 14:45, where we will explore the benefits of automating tax calculations and reporting to manage global compliance, supporting recurring revenue models, and avoiding costly errors and audit exposure.

This is the second webinar in a series where we will discuss:

• How digital business models have evolved and what that means for tax
• Common pain points for e-commerce and marketplace businesses
• Why automating tax determination and reporting is becoming essential
• Practical steps to reduce tax compliance risk and support international growth

This will be particularly insightful for:

• Tax, finance and revenue leaders at SaaS, media, and digital content businesses
• D2C businesses looking to streamline compliance
• Anyone looking to expand globally, who requires scalable subscription billing through tax automation

Secure your spot now to gain expert insights, practical strategies, and actionable steps to stay compliant. For further information on how to register please contact Ruby Buckland.

Following the success of our first AI Tax University event in October, we will be hosting another running of the event on 3 February 2026 at our Churchill Place offices in London.

This one-day training workshop has been designed to provide attendees with a strong grounding in AI and the value it can deliver for tax functions. A large part of the day will focus on MS Copilot where we will run hands-on training on fundamental Copilot skills as well as exploring tax-specific use cases leveraging Copilot. A pre-requisite for attendees is to already hold a paid Copilot licence. The session is not available to EY audit clients.

The full-day event will take place on Tuesday 3 February 2026, 9:30 to 17:00 at our EY office in 25 Churchill Place, London.

To attend the session, fees are £2,000 (plus VAT) per person.

If you or other members of your tax team are interested in attending, or would like further information, please contact Liam Larke.

Agenda

On Wednesday, 4 February, from 10:00 – 10:30, we will be hosting a webcast: The latest on e-invoicing in the UK and no regret next steps, featuring HMRC’s e-invoicing lead, Rachel Stirrat as guest speaker.

Rachel will provide an update on HMRC’s plans in the next year following the publication of the consultation responses during the UK’s Budget last November (Promoting electronic invoicing across UK businesses and the public sector). Our panellists, Chris Taylor (Indirect Tax Transformation Partner and e-invoicing lead) and Simon Swanson (Indirect Tax Transformation Senior Manager), will then delve into actionable steps businesses can take now, based on their experience assisting companies with e-invoicing regimes in other countries. Topics will include evaluating current processes, systems, and data for compliance, identifying suitable technology solutions, and how to build a business case for budget and resources. We will also look to answer any questions you may have at the end of the session.

To register for the event, please click here.

For further information, please contact Sarah Delaney.

Our next Indirect Tax Perspectives event will take place on Wednesday, 11 February. The event will take place in person at our 1 More London Place office, London, SE1 2AF. The session will run from 9:30 to 11:00, with networking and refreshments available from 8:45.

Following the main plenary sessions, we are also offering an optional session on AI indirect tax use cases which will run from 11:15 to 12:15, where we will showcase a number of AI use cases through solution demos.

During the event, we will cover:

• A round-up of the latest indirect tax topical issues
• E-invoicing update including guest speaker, HMRC’s Rachel Stirrat
• Trade Policy updates for UK businesses to monitor in 2026
• Gen AI update and indirect tax developments
• Optional session – Gen AI indirect tax use cases deep dive (11:15 to 12:15)

Following these presentations, we would be delighted if you could join us for lunch in our Forum Suite which will be available until 13:00.

Please register for the event and optional session here. There is also an option to opt into lunch; let us know if you have any dietary requirements.

For further information please contact Sarah Delaney.

The White House has issued two Proclamations relating to trade and tariffs signed by Donald Trump:

• Adjusting Imports of Semiconductors, Semiconductor Manufacturing Equipment, and their Derivative Products into the United States – “I have also determined that it is necessary and appropriate to impose an immediate 25 percent ad valorem duty rate on the import of certain advanced computing chips and certain derivative products described in the Annex to this proclamation (Covered Products), when such importation does not contribute to the buildout of the United States technology supply chain and the strengthening of domestic manufacturing capacity for derivatives of semiconductors. I have further determined that it is necessary and appropriate that this duty rate not apply to imports of these Covered Products for use in United States data centres, for repairs or replacements performed in the United States, for research and development in the United States involving these chips, for startups in the United States, for non-data centre consumer applications in the United States, for use in non-data centre civil industrial applications in the United States, for use in United States public sector applications, or for other uses that the Secretary determines contribute to the strengthening of the United States technology supply chain or domestic manufacturing capacity for derivatives of semiconductors.”
• Adjusting Imports of Processed Critical Minerals and Their Derivative Products into the United States – “I determine that it is necessary and appropriate to enter into negotiations with trading partners to adjust the imports of PCMDPs so that such imports will not threaten to impair the national security of the United States. Depending on the outcome of such negotiations, I may consider alternative remedies in the future, including minimum import prices for specific types of critical minerals. I therefore direct the Secretary and the United States Trade Representative (Trade Representative) to jointly pursue negotiation of agreements or continue any current negotiations of agreements, such as agreements contemplated in section 232(c)(3)(A)(i) (19 U.S.C. 1862(c)(3)(A)(i)), to address the threatened impairment of the national security with respect to PCMDPs. Depending on the status or outcome of those negotiations, I may take other measures to adjust the imports of PCMDPs to address the threat to the national security found in this proclamation.”

Please refer to our Global Tax Alert for further details regarding the impact on businesses and some of the actions that affected businesses should consider.

President Trump has posted on social media that the US will impose tariffs on countries that do not support the US’s acquisition of Greenland.

“Starting on February 1st, 2026, all of the above mentioned Countries (Denmark, Norway, Sweden, France, Germany, The United Kingdom, The Netherlands, and Finland), will be charged a 10% Tariff on any and all goods sent to the United States of America. On June 1st, 2026, the Tariff will be increased to 25%. This Tariff will be due and payable until such time as a Deal is reached for the Complete and Total purchase of Greenland.”

On 19 January 2026, Prime Minister Sir Keir Starmer held a press conference in which he said that the UK’s relationship with the US was an important one, but the imposition of tariffs on allies is “completely wrong” and a diplomatic solution should be pursued in relation to the security of Greenland. In response to further questions on whether the UK could impose retaliatory tariffs, he reiterated that it was in no-one’s interests to have a trade war. His speech is available here.

For further information please contact Marc Bunch, Ross Freeman or Will Main.

Topics – Valuation and minimum profit margin

C-603/24 Stellantis Portugal

On 15 January 2026 the Court of Justice of the European Union (CJEU) delivered the opinion of Advocate General Kokott (AG) in this Portuguese referral which asks whether Article 2 of the Sixth VAT Directive, as worded in the version in force at the time of the facts, should be interpreted as meaning that the concept of the supply of services effected for consideration contained in that provision includes an adjustment of the sale price of vehicles which is duly provided for and determined in a contract concluded between the parties, in order to achieve a minimum profit margin, and which is documented by means of a credit or debit note issued to the applicant/appellant by the European manufacturers of the General Motors Group?

The appellant, formerly General Motors Portugal, Lda. (GMP), is a company operating in the motor vehicle trade as part of an economic group engaged in the manufacture and distribution of vehicles (SUPs) and parts and accessories (P&A).

The group is made up of companies performing the following functions:

• The original equipment manufacturers (OEMs), which manufacture the products and/or supply them to the national sales companies or national sales organisations (NSCs/NSOs)
• the NSCs/NSOs, which distribute those products in a market that has been predefined in geographical terms; and the contract assemblers, which undertake the assembly of the products for the OEMs, following their instructions

In the production chain, the appellant operates as an NSC/NSO, purchasing vehicles from the European manufacturers (OEMs) of the General Motors group. The vehicles purchased are resold to independent Portuguese dealers, which, in turn, sell those vehicles to the final customers.

In the event of manufacturing defects, the final customer goes to the dealer to have them repaired, by the dealer, in its own facilities. The Portuguese dealers then charge the appellant for the costs they have incurred in repairing the vehicles, charging the relevant amount of VAT.

The appellant informs the European manufacturers of the General Motors group of the costs incurred in distributing the motor vehicles and the parts and accessories manufactured by the group. Those costs include the vehicle repair costs and the appellant’s operating costs, in particular staff, electricity and marketing costs.

Depending on the costs declared, an adjustment is made in respect of the price of the vehicles sold to the appellant by the European manufacturers of the General Motors group. Under the contractual terms of this arrangement, General Motors Corporation (GM) and its GME subsidiaries apply a market-based pricing procedure to determine the transfer prices of the SUP and P&A products sold by the manufacturing units of GM (the OEMs) to the distribution units. The price is determined by deducting from the external sale prices the total amount of the relevant distribution costs and the amount of the operating profit aimed to be made.

In accordance with the procedure followed by GME, the initial transfer price is determined in each reference period applying a gross margin discount to the expected external sale price. At the end of each period, the transfer price is adjusted according to the operating profit previously agreed for the distribution unit, such that the actual amount of the operating profit for that unit is the same as the operating profit target amount.

The contractual terms also provide that the initial transfer price is adjusted at the end of each reference period to ensure that the actual financial results of the distribution unit tally with the agreed operating profit. That adjustment is made with the relevant increase or reduction being recorded in the accounts of the selling unit (OEM). The adjustment of the sale price of the vehicles is documented by means of a credit or debit note issued to the appellant by the European manufacturers of the General Motors group.

During a tax audit, the Portuguese tax authorities concluded that the price adjustments constituted remuneration for the services provided to producers. These services should be subject to VAT and documented by invoices.

On appeal, the Supreme Administrative Court referred the case to the CJEU, asking whether an adjustment to the sales price of vehicles, which is aimed at achieving a minimum margin and is duly established and specified in a contract between the parties, should be considered a supply of services for VAT purposes.

The AG recalled that the price of the products sold to the appellant (cars and parts) aims to ensure that they achieve only, or at least, a certain result (that is relevant for the purposes of income tax law) and that they are taxed in Portugal. Therefore, the price of the products sold are adjusted periodically by the seller. The consequence is that, in the event of a price increase, the purchaser subsequently still has to pay something to the seller, whereas, in the event of a price reduction, the purchaser has made an overpayment and is therefore reimbursed. For that reason, the seller issues corresponding credit or debit notes. The tax authority now wishes to treat that reimbursement as consideration for a service supplied to the seller by the purchaser in Portugal.

The AG opined that on first inspection, she is unable to see what service is supplied by a purchaser who, for whatever reason, subsequently pays a lower or higher purchase price. The tax authority considers that the bearing of the warranty costs of ‘defective’ vehicles purchased and resold by the appellant constitutes a service supplied to its seller. The AG considered that it is quite clear from Article 2(1) of the VAT Directive that merely bearing costs cannot constitute a supply of services; VAT law does not tax payments as such. A payment (and thus also a refund of costs incurred) is relevant for the purposes of VAT law only when it is made ‘in return for’ a supply of services.

The AG considered that the purchase price adjustment in the immediate case serves ‘only’ to allocate the profits of one intra-group company to another. That is, in principle, irrelevant for the purpose of VAT law. Profit distributions are not made for an economic activity (supply of goods or services), but only for participation in another’s economic activity. The adjustment of profits for the purposes of income tax law is in principle alien to VAT law and therefore does not constitute consideration for a supply of services, regardless of who supplies them.

However, the AG considered that examining the referral in more detail, it raises the interesting question of the consequences, under VAT law, of an adjustment of transfer pricing made for reasons of income tax law. The AG recalled that whilst this had been considered in Arcomet Towercranes, it was not answered exhaustively in that case.

The AG considered that there are certain situations in which an adjustment of transfer pricing may have consequences for the purposes of VAT law, and others in which it does not.

The AG opined that the correct question for consideration is ‘whether an adjustment of the consideration for an intra-group supply that is made for income tax reasons should be regarded as a significant change in the taxable amount for the purposes of VAT law in accordance with Article 90 of the VAT Directive or as the taxable amount for a separate service supplied by the person who benefits from the change in the transfer price, or is it irrelevant for the purposes of VAT law as a mere adjustment of profits between two intra-group undertakings?’

Separate supply of service for the creation of input and output vs. fictitious invoicing of fictitious supplies intended to correct profits

The AG recalled that pursuant to Article 2(1)(c) of the VAT Directive, ‘the supply of services for consideration within the territory of a Member State by a taxable person acting as such’ is subject to VAT.

A supply of services is effected ‘for consideration’ and subject to VAT only if there is a legal relationship between the provider of the service and the recipient pursuant to which there is reciprocal performance, the remuneration received by the provider of the service constituting the actual consideration for the service supplied to the recipient.

Where the service to be supplied and the consideration to be paid for it arise from an underlying contract, such a legal relationship can, in principle, be assumed to exist.

However, in the immediate case, there is no contract under which a service supplied by the purchaser (the appellant) to the seller (OEM) could somehow be justified. A supply of services is merely alleged by the tax authority.

Subsequent adjustment of the transfer price by the tax authority for the purposes of profit adjustment

The AG considered that the situation would be different where an adjustment of the transfer price, which has been ordered by the tax authority (and is thus unilateral), is made with a view to an appropriate allocation of profits between companies.

The AG noted that there are differences between income tax law and VAT law; in the context of income tax, when a tax authority unilaterally adjusts a transfer price for profit allocation between companies in different states, it primarily affects the income tax of one company (Company X) without necessarily impacting the other (Company Y), creating a dilemma that can lead to disputes. In contrast, VAT law treats price adjustments as having equal effects on both the supplier and recipient; changes in transfer pricing affect the supplier's tax liability and the recipient's input tax deduction proportionally, based on the agreed price rather than market value. This creates a tension between income tax rules, which aim for arm's length valuations, and VAT rules, which consider the actual price paid. Ultimately, unilateral adjustments by tax authorities for income tax purposes do not change the agreed consideration between companies, thus not altering the VAT due on previous transactions.

Subsequent adjustment of an undetermined but determinable (variable) price

The AG considered that the immediate case concerns the subsequent adjustment of a price for the vehicles supplied, which, at the time of the agreement, was yet to be determined and was therefore designated by a reference price, but which could vary upwards or downwards depending on changes in various parameters. In that regard, it is entirely possible to speak of an undetermined but determinable (variable) price.

At the end of each period, the transfer price was adjusted according to the operating profit previously agreed for the distribution unit. That method of calculating the sale price between the OEMs and the appellant ensured that the appellant retained the profit that had been allocated to it within the group, but no more or less.

The AG opined that for such a situation there are provisions in the VAT Directive governing the consequences under VAT law. There is therefore no need to construct fictitious supplies of services beyond the supplies made.

Article 90 expressly states that, where the price is reduced after the supply takes place, the taxable amount is to be reduced accordingly under conditions which are to be determined by the Member States. In this case, that would be the taxable amount of the supply to the appellant. At the same time, Article 73 covers subsequent price increases because, under that provision, the taxable amount of the seller’s supply is ultimately all it receives for its supply. That naturally includes subsequent increases of the purchase price. Such a change in the taxable amount cannot at the same time constitute a supply of services. A subsequent price adjustment therefore has an impact only on the taxable amount of the underlying transaction.

In conclusion, the AG opined that Articles 2(1)(c), 73 and 90 of the VAT Directive must be interpreted as meaning that the relevance, for the purposes of VAT law, of an adjustment of profits made for reasons of income tax law depends on what it relates to and how it is made:

• Where the adjustment of profits is made by means of separate supplies of services for consideration (creation of input and output) and there are not only fictitious supplies of services, those separate supplies of services for consideration constitute taxable transactions for the purposes of Article 2(1)(c)
• Where the adjustment of profits is made unilaterally and subsequently by the tax authority solely for the purposes of an appropriate allocation of profits between two tax-levying States, that is not, in principle, relevant for the purposes of VAT law
• Where, as in the immediate case, the adjustment of profits is made by means of a sale price which has been provided for precisely for that purpose and agreed to be variable and which relates to a specific supply of goods, that constitutes a reduction in the taxable amount under Article 90 or a further part of the taxable amount under Article 73 in respect of the supply made. Since the change in the taxable amount of a supply relates solely to the consideration, it cannot itself constitute a ‘supply of services for consideration’ within the meaning of Article 2(1)(c).

For further information, please contact Mitchell Moss or Simon Harris.

Comments: The VAT consequences of transfer pricing adjustments has once again been considered by the CJEU as they continue to raise questions regarding settlements made. It remains to be seen whether the Court follows the AG’s opinion.

This latest opinion is perhaps not surprising, the AG concluding that the mechanism in place results in a reduction in the price which requires the appropriate adjustments in VAT accounting. Also unsurprisingly, the AG has opined that a simple adjustment of a sale price made to hit a profit margin cannot be interpreted as a supply of services.

The AG highlights, inter alia, the absurdity of the tax authority’s argument in the event of the distribution costs being lower than expected. In such a situation the appellant would essentially have to pay the OGM for the privilege of its deemed supply. Such a concept cannot exist under VAT law.

Simply bearing costs is not a supply. In essence the AG has opined that a simple adjustment of a price for an original supply can never in itself be a separate supply of services.

However, to address the issue fully, the AG has provided a framework with additional categories by reformatting the question. This could be a valuable aspect of the opinion when considering arrangements going forward.

The facts are very different in this case to that of Arcomet where the transfer pricing adjustment was the whole consideration and could have gone the other way. In this case, there is the sale of a car for a price which can only be finally determined at the end of the year. If that final price differs from the initial price charged, that is a change in consideration.

The impact of transfer pricing on VAT issues is undoubtedly significant and is likely to continue to raise questions of interpretation. Any business processing such adjustments should carefully review its arrangements together with recent litigation in this area to ensure any risks are managed. Businesses may wish to review how they are treating transfer pricing adjustments, and whether the VAT team has sight over any TP adjustments that are made.

Thursday 22 January

Judgment – C-379/24 Agrupació de Neteja Sanitaria and C-380/24 Educat Serveis Auxiliars

Topics – VAT exemption – ancillary cleaning services – education and healthcare

Joined cases – These Spanish referrals ask, inter alia, whether national legislation which provides that ancillary services must be directly and exclusively attributable to an exempt activity to qualify for exemption, is contrary to the meaning and purpose intended by the EU legislature with the exemption contained in Article 132(1)(f) of the VAT Directive, where that stipulation is interpreted such that a service – cleaning in the area of education/health – is not considered to be ‘exclusive’ to that exempt sector, even though it is singular, technical and complex in its organisation, as well as absolutely necessary.

Monday 2 February

Hearing – T-268/25 Sampension Livsforsikring

Topics – VAT group eligibility – ownership requirements

This Danish referral asks whether the first paragraph of Article 11 of the VAT Directive, read in conjunction with the second paragraph thereof, is to be interpreted as precluding legislation of a Member State under which eligibility for creating a VAT group comprising persons not engaged in an activity subject to registration or not engaged in an economic activity, is subject to the condition that one person in the VAT group directly or indirectly owns 100% of the other person or persons in the VAT group. If question 1 is answered in the affirmative, does Article 11 have direct effect in the Member States, with the result that taxable persons are entitled to be registered as a VAT group in cases where the legislation of that Member State does not comply with that provision and cannot be interpreted in accordance therewith.

Topics – Catering v supply of food

Slice of Pie Limited

The First-tier Tribunal (FTT) has released its decision in this case concerning the supply of food to nurseries for lunches and afternoon meals. The sole issue in dispute is whether the supply is ‘catering’ and subject to VAT at the standard rated. It is agreed that if it is not ‘a supply in the course of catering’ then it will fall within Group 1, Schedule 8, VATA94 and will be zero-rated.

SPL supplies cooked meals to both private and state-run nurseries. Meals are ordered from a weekly menu in advance. All meals are cooked daily from scratch by SPL, including desserts. No pre-made food is purchased.

The cooked meals are delivered in separate containers, typically holding around 20 portions. Each component of the meal, such as protein, carbohydrate, vegetables, sauces, bread, and pudding, is delivered in distinct containers. This ‘deconstructed’ format allows for flexibility in serving, particularly in accommodating dietary restrictions and preferences. It also allows for the food to stay heated for longer than it would do if it were mixed.

For health and safety requirements, when each of the distinct containers is opened, the temperature is checked and recorded on the delivery note. Generally, a meal must be served within three-and-a-half hours of it being cooked to ensure that it is consumed safely and at the appropriate temperature.

Section 30(2), VATA1994 provides that supplies of the goods and services described in Schedule 8 are zero-rated. Group 1, schedule 8 provides for the supply of food of a kind used for human consumption including drinks, except (a) a supply in the course of catering; and (b) a supply of anything comprised in any of the excepted items, unless it is also comprised in any of the items overriding the exceptions which relates to that excepted item.

A supply of anything in the course of catering includes: (a) any supply of it ‘for consumption on the premises’ on which it is supplied; and (b) any supply of ‘hot food’ for consumption off those premises.

In the case of any supplier, the premises on which food is supplied include any area set aside for the consumption of food by that supplier’s customers, whether or not the area may also be used by the customers of other suppliers.

‘Hot food’ means food which (or any part of which) is hot at the time it is provided to the customer and (a) has been heated for the purposes of enabling it to be consumed hot, (b) has been heated to order, (c) has been kept hot after being heated, (d) is provided to a customer in packaging that retains heat (whether or not the packaging was primarily designed for that purpose) or in any other packaging that is specifically designed for hot food, or (e) is advertised or marketed in a way that indicates that it is supplied hot.

The FTT noted that the food is delivered in insulated containers designed to retain heat. Meals are delivered hot and ready to eat, with no reheating or cooking required by the nursery. Indeed, they are described on the SPL website as ‘piping hot’.

The food is delivered and is consistent with commercial catering, it requires little preparation and is delivered ready for consumption. There is no onward supply, and contracts stipulate that the food must be consumed on the nursery premises and not sold onward. The FTT considered that this supports the view that the supply is tailored and controlled, as in catering arrangements.

The FTT also noted that SPL delivers the food but does not provide premises, seating, cutlery, or staff to assist with serving.

The FTT considered that taking all factors into account, the ordinary person would regard the supply as catering; hot, ready-to-eat meals are delivered for immediate consumption, they are ordered from a menu and presented in a manner consistent with commercial catering. Any additional steps required by nurseries do not amount to significant food preparation.

The FTT also recalled that a supply of anything in the course of catering includes (a) any supply of it for consumption on the premises on which it is supplied; and (b) any supply of hot food for consumption off those premises.

In identifying the ‘premises’ in the immediate case, the only two options would appear to be the nursery or the SPL kitchen where the food is cooked.

The FTT considered that if the relevant premises are the nurseries, then the supply is catering as it is supplied for consumption on those premises. That is apparent from the fact that it is delivered to the premises, and the contract requires that the food is consumed on the nursery premises. If the relevant premises are the SPL kitchens, then it is a supply of hot food for consumption off those premises. It is ‘hot food’ because it is at a temperature above the ambient air temperature when it is supplied to the nurseries and (1) has been heated for the purposes of enabling it to be consumed hot; or (2) has been heated to order; or (3) has been kept hot after being heated, because SPL has stored it in an environment which retains heat; or (4) it is provided to a customer in packaging that retains heat; or (5) is advertised or marketed in a way that indicates that it is supplied hot. The contracts also guarantee that (for orders over 20 portions) they will be supplied hot.

Dismissing the appeal, the FTT concluded that the supply is one of hot, ready-to-eat meals delivered for immediate consumption. Also, whilst the supply is made by SPL, the fact that the food is consumed by the children does not prevent it from being ‘consumed on the premises’. In this regard there is no requirement for the contractual recipient to be the person who eats the food; the provisions simply stipulate where consumption occurs. It follows that the supplies are standard rated.

Comments: A reminder that nursery operators and others outsourcing catering should consider the potential VAT costs where they are unable to make a recovery of any VAT charged.

Topics – Zero-rating – equipment and appliances designed solely for use by a disabled person

Nimbus: The Disability Consultancy Service Limited

The First-tier Tribunal (FTT) has released its decision in this case concerning an ‘Access Card’ used to help disabled persons convey their access requirements to venues and service providers, and to serve as recognised proof of their requirements.

Nimbus had charged VAT at the standard rate on the Access Card but requested a review by HMRC as to whether it should be zero-rated. HMRC responded, stating that while the Access Card “may help a person in coping with their disability” it was not “something designed specifically for actually aiding their disabilities”. It considered that zero-rating did not apply because the Access Cards “are not eligible items because they are tools for communicating a disability, not a piece of equipment or apparatus that addresses an actual disability.”

Section 30(2), VATA94 states that supplies of the goods and services described in Schedule 8 are zero-rated. Group 12 covers drugs, medicines, aids for the disabled etc. Item 2 includes, inter alia, the supply to a disabled person for domestic or his personal use, or to a charity for making available to disabled persons by sale or otherwise, for domestic or their personal use, of (g) equipment and appliances not included in paragraphs (a) to (f) designed solely for use by a disabled person.

Nimbus accepted that to fall within Item 2(g), the supply must be one of goods. It asserts that the card is a physical item; whist contractually it remained the property of Nimbus, the economic and commercial reality of the supply is that the Access Card, de facto, becomes the property of the consumer to use as they see fit. Nimbus does not seek to recover the Access Card post-expiry; it is therefore a supply of goods. Alternatively, if the FTT finds the supply to be one of services, as per HMRC’s submissions, the Access Card was hired to the user and therefore remains a relevant zero-rated supply by virtue of Note 5, Group 12, Schedule 8 VATA94.

Note 5 provides that the supplies described in items 1, 2 and 2A include supplies of services of letting on hire of the goods respectively comprised in those items.

The FTT noted that the primary issue in dispute is whether the supply is one of goods or services. The parties agreed that if the supply is one of goods, then Nimbus’ appeal must succeed. If the supply is one of services, then the FTT must determine whether it falls within Item 2(g) by virtue of Note 5.

The FTT recalled that it is evident from the contract that Nimbus retained legal ownership of the physical cards. The cardholders did not have the right to dispose of tangible property as owner; what they received was the ‘possession’ of the Access Cards.

The FTT considered that Nimbus had provided no evidence that the contractual terms do not reflect the economic and commercial reality. As cardholders do not have the ‘right to dispose’ of the card and as the ‘whole property’ is not transferred to them, the supply is one of services rather than goods, which therefore cannot fall within Item 2(g), unless through the application of Note 5.

Considering whether the supply of the Access Cards is one of ‘letting on hire of the goods’ the FTT noted that the card is left with the disabled person for them to use. It does not become their property, and they pay a fee so that they can use it during the three-year period that it is valid for. The fact that it is for the entire anticipated working life of the asset does not prevent it being ‘let on hire’.

Allowing the appeal, the FTT held that the card falls within Item 2(g), through the application of Note 5, as it is ‘equipment and appliances not included in paragraphs (a) to (f) designed solely for use by a disabled person’ let on hire to the disabled person.

This Notice explains all of HMRC's Extra Statutory Concessions in force at the time of publication. Following Revenue and Customs Brief 1(2026): Removal of linked goods concession, section 3.7 has been removed with effect from 8 January 2026.

HMRC considers that the supplies previously eligible to be treated as single supplies under the concession should be treated as single supplies under the legislation, as confirmed by existing case law.

Businesses should now refer to HMRC’s policy as described in VATSC11113 – Supply: Single and multiple supplies: HMRC’s approach: The general approach.

This Guidance explains that for VAT accounting periods starting on or after 1 January 2023, taxpayers will be charged late payment interest on overdue payments. This is one of several penalty and interest changes that replaced the VAT default surcharge. The late payment interest example has been updated with new dates and the new late payment interest percentage, from 6% to 8.5%.

Ghana

Parliament has enacted several laws introducing significant changes to indirect taxation, effective from 1 January 2026, and aimed at enhancing tax compliance and administration:

• The VAT rate has been unified at 15%, while the previous flat rates for certain supplies have been abolished, requiring businesses to adjust their pricing and compliance approaches accordingly. The levies that go with the VAT remain at the aggregate rate of 5%
• New administrative measures include stricter penalties for VAT non-registration, increasing the administrative burden on businesses and emphasising the need for timely compliance
• New substantive measures include changes in the scope of taxable activity, taxable supply, exempt supplies, zero-rated supplies and relief supplies

Please refer to our alert for a more detailed analysis of the announced changes.

Canada

The Border Services Agency has published Customs Notice 25-33, Steel Derivative Goods Surtax Order. This provides administrative guidance for the Steel Derivative Goods Surtax Order, SOR/2025-267 (SDGS Order), which imposes a 25% surtax on certain steel derivative goods imported into Canada on or after 26 December 2025.

A remission order has also been introduced to provide relief from the 50% surtax on certain steel goods without domestic alternatives, allowing eligible importers to claim remission within two years of importation if certain conditions are met.

Those affected should assess the implications of these changes on their import strategies, ensure compliance with the new surtax regulations and consider the potential for increased costs associated with steel imports.

Canada

The Revenue Agency has confirmed to an industry group that it will reverse a longstanding position and adopt the position that trailing commissions will be subject to goods and services tax/harmonised sales tax (GST/HST) effective 1 July 2026, affecting mutual fund managers, dealers and agents.

Trailing commissions generally result from supplies made between mutual fund managers and dealers, and between dealers and agents.

This change means that mutual fund trailing commissions paid to managers, agents and dealers will now incur GST/HST, requiring dealers and agents to register for GST/HST if their taxable supplies exceed CA$30,000, potentially necessitating significant operational adjustments.

Those affected should prepare for these changes by reviewing their agreements, updating accounting systems and ensuring compliance with the new GST/HST requirements to avoid potential penalties and ensure proper tax reporting.