Weekly VAT News

The US Supreme Court recently held that the International Emergency Economic Powers Act (IEEPA) does not authorise President Trump to impose tariffs. However, the ability for companies to obtain refunds on amounts collected under IEEPA is uncertain and the President has moved to use other existing authorities which may raise additional legal challenges. There have also been several new tariff-related proposals in Congress that could impact global supply chain structures.

This joint webcast with EY and DLA Piper on Wednesday, 1 April, 11:00 – 12:15 ET or 16:00 – 17:15 BST will discuss the Supreme Court decision, the actions companies can take to protect refund positions, the new tariff actions the President has taken and the legal issues raised, the ongoing trade investigations and the operational strategies global businesses can consider to mitigate the impacts of the ongoing geopolitical and trade volatility.

Please register for this event here. If the timing doesn't work for you, please register and you will receive the replay to view at your convenience.

We are delighted to invite you to join us on Tuesday, 19 May, 13.30–17.30 (with optional networking and drinks afterwards) for an exclusive event bringing together industry peers to explore the evolving landscape of global tax mandates and the importance of ensuring accurate data in your core SAP platform from the outset.

In this session, we will discuss the following key topics:

• The importance of tax being involved in the SAP S/4HANA project
• The significance of data in the indirect tax transformation journey
• SAP updates on the latest technologies including Business Technology Platform (BTP), Business Data Cloud (BDC) and Artificial Intelligence
• The Jaguar Land Rover SAP S/4HANA tax determination story

This event is aimed at:

• Indirect Tax leaders
• Tax Technology and Transformation leaders
• Projects leads for Tax Technology or SAP S/4HANA projects

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.

EY's Lynlee Brown has written an article discussing the five actions businesses should take now following the US Supreme Court’s February 2026 decision to strike down the IEEPA tariffs. The article sets out how businesses are evaluating how to respond and what comes next. Companies must act quickly to understand evolving tariff exposure and protect potential refund opportunities. Coordinated tax, trade and finance actions are essential to manage uncertainty and maintain operational resilience.

For further information, please contact Ross Freeman.

EY’s Clemens Hoelbling has written an article in Tax Adviser which explores how supply chain transformation reshapes VAT liabilities, cash flow and compliance, requiring early tax involvement to ensure viable, efficient operating models.

Topics – VAT and travel services outside the EU – travel agents

T-221/25 TUI Belgium

On 25 March 2026 the Court of Justice of the European Union (CJEU) released the decision of the General Court (GCEU) in this Belgian referral concerning a dispute over the levying of VAT on travel services outside the EU by travel agencies. TUI Belgium (TB) is of the opinion that those services are exempt from VAT and therefore claimed a refund of VAT previously paid. The referral asks whether a Member State may rely on a VAT standstill clause without an express statutory derogation from the exemption for travel agents’ services relating to travel outside the EU or whether replacing a provision which explicitly taxes supplies with legislation where being taxed follows only implicitly, means that the new regime is no longer identical in its main points to the previous legislation, rendering it invalid.

TB is a travel agency which sells holiday trips under its own name and uses the services of third parties to that end. TB considered that it was due a VAT refund on trips outside the EU that it organised between 1 January 2000 and 30 April 2014 on the basis that those travel services were exempt from VAT. TB claimed that modifications made to the Belgian VAT law removed the explicit provisions that allowed for the taxation of these services, thus making them exempt. The tax authorities refused that refund, as they considered that even after a change in national law on 1 January 2000, travel services outside the EU remain subject to VAT.

Domestic legislation which entered into force on 1 December 1977 made travel agency services for the organisation of trips outside the EU subject to VAT. Under those rules, travel agents were required to act as agent of the traveller. However, they were explicitly excluded from the tax exemption which applied to brokers and agents with regard to supplies and services provided abroad. This amendment to the Belgian VAT Code was made shortly prior to the entry into force of the Sixth Directive on 1 January 1978. The amendment resulted in the Belgian rules derogating from Article 26(3) of the Sixth Directive, according to which those services were exempt from VAT. By the standstill clause of Article 28(3)(a) of the Sixth Directive, the Belgian legislature maintained the levying of VAT on travel services outside the EU.

From 1 January 2000, following the entry into force of the royal decree of 28 December 1999, the Belgian VAT Code provided that travel agents act in their own name, in line with the first paragraph of Article 306(1) of the VAT Directive. Accordingly, the second subparagraph of Article 41(2) of the VAT Code, which expressly excluded travel agents from the VAT exemption applicable to brokers and agents in relation the supply of goods and services abroad, was deleted, since it had become superfluous in a context in which the statutory presumption under the first paragraph of Article 20(2) of the VAT Code, according to which travel agents were ‘treated as acting in the name and on behalf of the traveller’ as the latter’s agent, had also been removed. The sole intention of the Belgian legislature in doing so was to respond to the letter of formal notice from the European Commission acting on a complaint according to which the Belgian legislation had been liable to give rise to double taxation as a result of that statutory presumption. The regime in question, in place from 1 January 2000, was in keeping with the standstill clause established in Article 28(3)(a) of the Sixth Directive and Article 370 of the VAT Directive, since it involved continuing to apply VAT to the supply of services by travel agents in relation to travel outside the European Union that was already subject to VAT before 1 January 1978.

As a result of the changes, TB asserted that travel services outside the EU have been exempt from VAT since 1 January 2000, and allege infringement of Article 15(14), Article 26(1) and (3), Article 28(3)(a) and (4) of and Annex E, point 15 to the Sixth Directive, now Articles 153, 306, 309 and 370 of and Annex X, Part A, point 4 to the VAT Directive, as well as infringement of the general principle of the primacy of EU law. Since 1 January 2000, it contends that Belgian law has no longer contained any express provision which derogates from the VAT exemption for travel services outside the EU and, therefore, the standstill clause of Article 28(3)(a) of the Sixth Directive can no longer be relied upon to continue taxing those services. Once the national provision was deleted, the VAT exemption provided for in the Sixth Directive and the VAT Directive for those services became directly applicable under Belgian law.

The tax authority argued that the amendments introduced on 1 January 2000 were merely a response to the European Commission’s infringement proceeding letter of formal notice. The provision by which those services were excluded from VAT exemption was deleted only because it had become redundant. Travel agencies still remained subject to VAT for travel services which are provided outside the EU.

The General Court ruled in favour of the Belgian Tax Authorities. It held that the standstill clause in Article 28 of the Sixth Directive and Article 370 of the VAT Directive does not require an express statutory provision derogating from the VAT exemption. What matters is whether the Member State taxed the relevant transactions before 1 January 1978 and continues to do so. The Court also held that deleting an explicit derogation and replacing it with provisions from which taxability follows implicitly does not by itself mean that the legislation is no longer identical in its main points. The Belgian amendments were aimed at avoiding double taxation and aligning terminology with EU law, not at changing the scope or nature of taxable activities. VAT could therefore continue to be applied lawfully to travel services supplied outside the EU.

Comments: For travel agents in Belgium, this means that claims stood behind these legislative changes will not succeed. More broadly, the decision supports the position that the standstill provisions can be triggered by legislation which does not specifically seek to derogate from the VAT rules (in the UK, that has always been clear); and that if the form of legislation changes but the liability of a particular supply remains the same, the standstill provisions can continue to be effective.

For more information, please contact Rachel Kennedy.

Wednesday 15 April

Opinion – T-397/25 A&P Deco

Topics – Immovable property, VAT deduction following change in taxable to exempt use of building, transfer of business where lessor is also transferor

A Belgian referral concerning the tax administration’s decision to adjust the VAT originally deducted on a building, since its activity changed from an operation subject to VAT (garden centre) to a letting exempt from VAT. The referral asks whether Articles 14, 19, 24 and 29 and Articles 184 to 190 of the VAT Directive, as well as the principle of neutrality laid down in Article 1(2) of the same directive, must be interpreted as meaning that, where the possession of immovable property is made available by a commercial lease following the transfer of the business, no adjustment must be made to the transferor of the business, which is also the lessor of the immovable property, in respect of the deduction of the VAT charged on the acquisition, construction, renovation or improvement of the parts of the business premises leased to the transferee and further used by the transferee for the carrying on of the taxable activity taken over.

Wednesday 22 April

Judgment – T-233/25 Mokoryte

Topics – Assignment of claims to subcontractors, adjustment of taxable amount under Article 90

A Romanian referral asks whether, in contractual relationships followed by subcontracting, in which there is an assignment of claims between the contractor and the subcontractor with the result that the subcontractor acquires a claim against the final beneficiary of the works, does Article 90 of the VAT Directive preclude the possibility of the taxable amount for VAT purposes being adjusted by the subcontractor assignee?

Opinion – T-268/25 Sampension Livsforsikring

Topics – VAT grouping eligibility

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 activity subject to registration or not engaged in 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 – Further Education Colleges – grant funding – consideration

Colchester Institute Corporation

The Court of Appeal (CA) has released its decision in this case concerning an appeal by HMRC against the decision of the Upper Tribunal (UT). In Colchester Institute Corporation (CIC) (CIC UT 2024), the UT held that the provision of education by CIC constituted the supply of services "for consideration" for the purposes of Article 2(1) of the VAT Directive in return for funding provided to CIC by two government agencies. In reaching that conclusion, CIC UT 2024 followed an earlier UT decision (CIC UT 2020) between the same parties.

HMRC challenged both decisions before the CA on the following grounds:

Ground 1: the UT in CIC UT 2020 erred in law in its analysis of a decision of the CJEU, C-151/13 Le Rayon d'Or Sarl v Ministre de l'Economie et des Finances of 27 March 2014 (Rayon d'Or).

Ground 2: the UT in CIC UT 2020 erred in its interpretation and application of the "direct link" requirement between the supplies made and the consideration received to meet Principal VAT Directive (PVD) requirements.

HMRC needed to succeed on both grounds of appeal to win.

CIC is a body corporate, incorporated as a further education college under the Further and Higher Education Act 1992, and registered for VAT. It is an "eligible body" for the purposes of Item 1, Group 6 of Schedule 9 of VATA 1994, and receives funding from the Education Funding Agency (EFA) and Skills Funding Agency (SFA) to deliver approved vocational education and training to eligible students, who were not charged fees. Funding was paid under detailed annual agreements, calculated largely by reference to student numbers and course characteristics, with clawback mechanisms for under-delivery.

The CIC UT 2020 proceedings arose out of a claim by CIC (in 2014) for overdeclared output tax on the basis that the provision of education to students was a business activity regardless of how it was funded. That meant that none of the buildings were put to non-business use and there was no requirement to account for deemed output VAT. CIC netted off input tax credited in the periods which were subject to the claim but did not net off the input tax credited as a result of the 2009 Lennartz claim which had been made and repaid more than 4 years earlier.

The earlier Upper Tribunal decisions (2020 and 2024) held that CIC’s provision of education was a supply of services for consideration, with the funding constituting third party consideration. HMRC considered this funding was not consideration for taxable supplies.

In the present case, HMRC raised an assessment in the amount of £123,642 to CIC for VAT periods 11/15 – 01/16. That decision was upheld on review on 13 July 2016, and CIC brought an appeal against the review decision to the FTT on 16 August 2017. That appeal was stayed pending the FTT and UT decisions in CIC UT 2020. When the appeal to the FTT in what became CIC UT 2024 was heard, it was common ground that the issue of whether CIC was making supplies for consideration was effectively determined by the decision of the UT in CIC UT 2020, and the FTT found for CIC in a decision of 4 March 2024.

On 23 May 2024, the FTT gave permission to appeal. On the appeal, HMRC reserved its argument as to the correctness of CIC UT 2020 and the appeal was dismissed on 4 December 2024. HMRC appealed to the Court of Appeal.

The CA ran through a raft of case law and considered that the authorities referred to identified a number of factors which are likely to be relevant in the assessment of whether a requisite direct link between the consideration and the services is established on the facts of a particular case. The CA considered that a direct link may be found between that service and the consideration even if it would be more challenging to establish such a link between the consideration paid and those services actually provided (rather than simply being made available). The fact the services to which the payment relates are provided for the benefit of a large and indeterminate group (e.g. potential users of public transport) or the interests of a group as whole (e.g. fruit growers), rather than individual recipients of services, will also be relevant. However, the CA held that it is important not to elevate any one of these factors into a threshold or determinative requirement.

In relation to Ground 1, the CA had to consider whether the UT in CIC UT 2020 erred in law in its interpretation of Rayon d'Or and in concluding that it was bound by virtue of Rayon d'Or to allow the appeal. In this respect, the CA held that the UT was right to conclude that the decision in Rayon d'Or was not wholly dependent on the CJEU's view that a Kennemer-type supply was in issue, and the UT was also right to conclude that the decision provided considerable support for CIC's appeal. Specifically, the CA held that:

1. The terminology used by the CJEU in describing the services provided in consideration for the payments received in Rayon d'Or is scarcely redolent of the "permanent availability" classification being the determining factor in the case.
2. The UT was right to point to Saudaçor as a case which did not involve a "permanent availability" service in the Kennemer-sense, but which treated Rayon d'Or and Kennemer as supporting the statement that consideration for PVD purposes could involve a flat rate payment for services provided on a permanent and continuous basis. The subsequent decision of the CJEU in EQ is to similar effect.
3. Rayon d'Or did not involve a payment in respect of services provided to a fixed group of recipients identified at the date the funding was agreed, but funding calculated by reference to the resident population of an RCHE at a particular date which would change to some extent over the course of the year or indeed the multi-year duration of the contract (e.g. through deaths, residents moving out and residents moving in). This would involve not simply some change in the identity of those receiving healthcare, but a change in the dependency level of residents, and indeed the dependency level of a particular resident might change during the year. The CA considered it clear from the CJEU's decision that the use of a formula in which the number and dependency of the resident population at a particular time served as a proxy for the healthcare made available to residents during the life of the funding agreement did not preclude the existence of a direct link between the payments from the insurance funds and the services provided to residents.

On that basis, the CA accepted HMRC's submission that Rayon d'Or did not, as the UT concluded, determine the appeal in CIC's favour, there being points of distinction between the position before the CJEU in Rayon d'Or and the facts of this case. However, the CA rejected HMRC's wider submission that Rayon d'Or provides no support to CIC's case on the appeal.

In relation to Ground 2, the CA held that the correct question was whether the Funding Agencies were funding certain activities of CIC on the basis that certain conditions would be met or paying for supplies of education by CIC to eligible students. The CA considered that answering that question requires the court to undertake the multi-factorial analysis referred to by the UT in South African Tourist Board. As the UT recognised, the appropriate starting point is the terms of the Funding Agreements themselves. In the CA’s view, the terms of both Funding Agreements strongly supported the view that the Funding Agencies are paying the funds in return for the provision of services by CIC to eligible students in the form of approved courses, rather than funding CIC generally on condition it provide such courses.

The CA considered that a notable difference between this case and the Apple and Pears, Balgarska and South African Tourist Board cases, is that CIC is providing the very same services to non-eligible students as it supplies to eligible students, but because the services provided to non-eligible students do not benefit from the Funding Agreements, those students have to pay for them.

Although there is no contract between the Funding Agencies and CIC's students, the CA held that was not sufficient to break the link between the funding and the services received. One of the purposes of the statutory power in issue, therefore, was to benefit those undertaking relevant courses of education, and, to that extent, there was a degree of legal proximity between them of a kind which supports the existence of a direct link between the funding the Funding Agencies were providing and the courses eligible students were receiving.

The CA held that it is not necessary for CIC to establish that every element making up the funding was provided in consideration of the supply of courses to eligible students. It is sufficient that some part (as it happens, the major part) was so provided. There would be no difficulty in identifying and allocating that part of the funding paid in consideration for the supply of courses to eligible students.

In summary, the CA found held that, although Rayon d’Or was not determinative on its own, the Upper Tribunal was correct to conclude that there was a direct link between the EFA/SFA funding and the education services supplied to students. The funding was paid in consideration of CIC delivering approved courses to eligible students, not merely as general support. The contractual terms, per student funding methodology, reporting obligations and clawback mechanisms, demonstrated sufficient reciprocity. The fact that funding was formula based, paid in advance, and not matched exactly to individual students or courses did not break the direct link.

Comments: Further education and training providers receiving government funding may be making taxable supplies where funding is paid in return for delivering education to identified beneficiaries, even if students are not charged fees.

Public sector and grant funded bodies must carefully assess whether funding is true “general subsidy” or third party consideration, focusing on contractual obligations and reciprocity.

VAT recovery and liability positions may be affected: funding treated as consideration can bring activities within the scope of VAT, potentially improving input tax recovery but also creating output tax obligations.

Funding agreement drafting and review becomes critical, as language such as “in consideration of” and delivery linked funding mechanisms strongly point towards taxable supplies.

For further information, please contact Carolyn Norfolk or Stewart Mathieson.

Boehringer Ingelheim Limited

Topics – Rebates, voluntary price schemes, VAT reduction

The Upper Tribunal (UT) has released its decision in the case of Boehringer Ingelheim Limited (BIL), which considers whether payments to the Department of Health and Social Care (DHSC) by a supplier of medicines under voluntary price control schemes, reduced the consideration obtained by the supplier and the VAT due on those supplies.

BIL supplied branded pharmaceutical products (health service medicines) to the NHS either directly or indirectly through wholesale distributors. The majority of BIL’s supplies were to wholesale distributors in the UK and all of their supplies were subject to VAT. Between 2014 and 2020, BIL made payments to the DHSC under two voluntary schemes: the Pharmaceutical Price Regulation Scheme (PPRS) and the Voluntary Scheme for Branded Medicines Pricing and Access (VPAS) (the Schemes). The payments were calculated as a percentage of net sales and were made after the supplies of health service medicines had been made. The purpose of the Schemes was to control the prices of health service medicines.

Article 90(1) of the PVD provides that “… where the price is reduced after the supply takes place, the taxable amount shall be reduced accordingly …”. In 2018, BIL took the view that the amounts paid to the DHSC should have been treated as reducing the price of its supplies of health service medicines to the NHS and thus the VAT chargeable. As BIL had accounted for VAT on the full price of the medicines, BIL considered that it had a claim under section 80 VATA 1994 for repayment of overpaid output tax. BIL submitted error correction notices claiming repayments of VAT charged between 1 April 2014 and 30 September 2020 for around £21 million.

HMRC rejected BIL’s claims on the ground that the payments made to the DHSC under the Schemes did not reduce the consideration obtained by BIL for the supply of the health service medicines. That decision was reviewed and confirmed in July 2021. BIL appealed that decision to the First-tier Tribunal (FTT).

The FTT ruled in favour of BIL holding that the payments to the DHSC did indeed reduce the price received by BIL for its supplies, and thus the taxable amount should be reduced accordingly. The FTT rejected HMRC's arguments that the DHSC was not the final consumer and that there was not a sufficient link between the payments and the supplies. The focus of the FTT’s judgment, however, was on the position of BIL, i.e. when it sold goods for a headline price, what was the real consideration that it received? The conclusion of the FTT was that it was the price paid by the wholesaler less the value of the rebate that had to be paid to the DHSC. As part of its analysis, the FTT held that the DHSC could be seen as the final consumer for the supplies of medicines as it provided the funding, via NHS England to NHS trusts (and similar funding in other parts of the UK). However, this was not a critical part of the analysis.

The UT has now allowed HMRC’s appeal, setting aside the FTT’s decision. The approach of the UT is different. Its core focus is on the price paid by the customer, i.e. the NHS body. There is thus a detailed analysis of the relationship between the DHSC and the NHS Trusts that are the purchasers of the drugs. The FTT had set out a series of propositions that it derived from case law. These are considered at paragraph 115 of the UT judgment. Critically, the UT disagrees with some of them with the key ones set out below. The words in inverted commas are the principles found by the FTT. The views of the UT as to the correctness of those principles are included next to those statements.

• (5) “the taxable amount serving as the basis for the VAT to be collected by the tax authorities cannot exceed the consideration actually paid by the final consumer. (Elida paragraph 19 and Commission v Germany paragraph 29)”
• (6) In principle, the UT agreed that “the taxable amount used to calculate the VAT chargeable cannot exceed the sum finally received by the taxable person (Elida paragraph 28, Commission v Germany paragraph 30, Boehringer (1) paragraph 32 and Boehringer (2) paragraph 41)”; however, the UT did not consider it is a stand-alone concept. The UT considered that it is the direct corollary of proposition (5).
• (7) As with proposition (6), the UT considered that whilst “the tax authorities may not collect an amount of VAT exceeding the tax which the taxable person received. (Boehringer (1) paragraph 32, Boehringer (2) paragraph 41 and Novo paragraph 30)”, that proposition is constrained by proposition (5) such that the tax authorities may not collect an amount of VAT exceeding the share of VAT paid by the final consumer received by the taxable person.

It is thus critical, in the view of the UT, to identify whether the DHSC can be treated as the final consumer. Propositions 12 and 14 were dealt with as follows:-

• (12) For the reasons set out in paragraphs [119] – [122] the UT disagreed that “the final consumer is the person who, in economic reality, bears the cost of the supply at the stage of final taxation. (Boehringer (1) paragraph 41 and Boehringer (2) paragraph 46)”
• (14) As with propositions (6) and (7) the UT considered that a conclusion that “whenever, after a transaction has been concluded, part or all of the consideration has not been received by the taxable person, the taxable amount and, consequently, the amount of VAT payable by the taxable person must be reduced (Article 90(1), Boehringer (1) paragraphs 32 and 39, Boehringer (2) paragraph 41 and Novo paragraph 30)” has at least the potential to be an incomplete reflection of the correct proposition. In a bilateral situation the proposition is usually correct as the payment made by the supplier to the customer will represent a reduction in the consideration received. In a multi-party situation, the focus of attention will be on whether there has been a true reduction in the consideration received rather than a payment made from the resources represented by that consideration.

At 119 – 122, the UT contrasts the position in the CJEU judgments (two for Boehringer entities and one for Novo Nordisk). In those cases, the rebate was paid either to the insurer that reimbursed the patient for the specific costs of medicines, or directly to the agency that met the costs. In other words, the rebate was paid to an entity that could be treated as the final consumer for the medicines because it paid for them, directly or indirectly and was therefore involved in the decision to purchase. For the DHSC, the relationship was much further removed with funding provided at a global level and with no involvement of the DHSC in paying for, or reimbursing, individual supplies of medicines. This is set out clearly at paragraphs 121 and 132:-

• 121. “Thus, we do not accept that economic funding alone suffices to replicate the ‘reciprocal performance’ or transaction-specific contribution required by the authorities. As explained in Boehringer (1) and Boehringer (2), what mattered was the insurer’s payment for the individual medicinal product, not its broader fiscal role. DHSC’s general budgetary function is too remote to establish the necessary link”.
• 132. … “DHSC provides only general, non-ring-fenced budgetary funding and does not reimburse or pay for specific supplies. Against that backdrop, the NHS architecture cannot be collapsed into a single consumer, and DHSC cannot be treated as part of the supply chain for the purposes of Articles 73 or 90”.

The UT considered the position where the recipient of the rebate, i.e. the DHSC, was not the final consumer. Its conclusion was:-

• 138. Where DHSC has only provided the budget cascaded through NHS England, the commissioning bodies, and down to the HSPs and Pharmacies, the price paid by the Healthcare Service Providers (HSPs) and patients has not been altered. As such there has been no rebate of the price into final consumption. Rather, it is our view that the Payments are made by BIL from income received on the supplies made by it at the head of the chain, but the payment is not, in substance, a reduction in the price paid by the final consumer. In that sense therefore they are akin to the payments made by Ibero to the tour operator, the amounts set off by the finance company when paying Primback, payments by Total for the purchase of the gift vouchers, and by Town and County when paying out prizes. Like those cases, the Payments were not reductions in the taxable amount, but payments made outside the supply chain not reducing the consideration given for any individual supply.

The Upper Tribunal did accept a limited exception: where medicines (e.g. certain vaccines) were supplied directly to and paid for by DHSC, the relevant portion of the payments could qualify for Article 90 adjustment. This was because it was clear that the DHSC was the customer in that case. This is a simple rebate scenario where either the rebate is paid to the customer directly or, as in Elida Gibbs, to the entity at the end of the supply chain.

HMRC’s second ground of appeal was that, where the final supply was zero-rated, no adjustment was possible. The Upper Tribunal accepted this in principle (it was in principle because the issue did not arise in practice on the basis of the UT’s judgment). Article 90 relief is precluded where final consumption is zero rated, as this would create an impermissible VAT loss in the supply chain. HMRC had run this argument in the FTT, but the FTT’s focus had been solely on whether the supply by the pharma was subject to VAT (with the position being that any leakage should be dealt with by a restriction on input tax recovery at the end of the supply chain). However, the UT accepted HMRC’s arguments that it was the supply to the final consumer that was critical – where that supply was zero-rated, there was no VAT to be adjusted on that supply and therefore no adjustment permitted to the pharma for its rebate payment.

Comments: This loss before the UT will be disappointing news for BIL against a backdrop of years of long running challenges from HMRC against these claims. The judgment significantly restricts Article 90 VAT recovery for pharmaceutical manufacturers under UK medicines pricing schemes. Given the sums at stake, and the success of BIL before the FTT and the success of all of the cases before the CJEU, we would expect BIL to appeal with clients with claims stood behind any ongoing litigation. Claims should continue to be lodged to avoid periods going out of time and any decisions subsequently appealed until the Boehringer case has been finally concluded.

In relation to the UT’s comments in paragraph 138 (see above) it is worth considering the facts of the cases referred to. Ibero was a travel agent case where Ibero was not in the supply chain for the holidays. Ibero received a commission for its introductory services and paid some of that to the provider of the holiday so that the cost to the traveller was reduced. It argued that the value of its intermediary service should be reduced by this amount. This is very different from the Boehringer position where the rebate is an automatic and inevitable consequence of the sale of the goods. For Ibero, on the other hand, it was a decision to spend some of their revenue to encourage people to buy holidays through them. This is akin to a form of marketing and therefore should not impact the taxable amount of the intermediary service.

Where the supply to the final consumer is zero rated, this will lead to difficult issues in practice. A pharma will, in many cases, not know whether its products will be used as part of wider hospital care (and therefore likely to be part of an exempt supply) or dispensed by a pharmacy for use at home (and therefore likely to be zero-rated).

We do not consider that this judgment is a correct reflection of the law. In its application of the principle of neutrality, it places all of the focus on the position of the customer at the end of the supply chain. This is to ignore the repeated references in the cases to the requirement that a taxpayer should not pay more in VAT than they receive in consideration. The essence of this position is in the UT’s approach to principles 5 and 6 set out above, which ignores the clear statements by the CJEU on repeated occasions. For example:

• “It would not therefore be in conformity with the VAT Directive for the taxable amount used to calculate the VAT chargeable to the pharmaceutical company, as a taxable person, to exceed the sum finally received by him. If that were the case, the principle of neutrality of VAT vis-à-vis taxable persons, of whom the pharmaceutical company is one, would not be complied with” – paragraph 35 of Boehringer 1
• “the taxable amount is the consideration actually received and the corollary of which is that the tax authorities may not collect an amount of VAT exceeding the tax which the taxable person received” – paragraph 41, Boehringer 2
• “it should be noted that, in accordance with the case-law cited in paragraph 41 above, it matters only that the taxable person has not received all or part of the consideration for the medicinal products. In the present case, Boehringer Ingelheim was not able to dispose of the full amount of the price received on the sale of the products, but only part of the final amount paid by wholesalers to which it sold its products, after deduction of the amounts paid to the State health insurance agency” – paragraph 51, Boehringer 2.

Further, the focus on the connection between the funding paid to the DHSC and the way that the DHSC funds the NHS is, itself, at risk of breaching the principle of neutrality. The effect of the judgment is that the VPAS rebate paid for vaccinations provided directly to the DHSC leads to a reduction in the taxable amount whereas the same rebate paid on the same products but sold to an NHS Trust would not. This would be the case even if those vaccinations were used in the same hospitals to treat people with similar conditions (this might happen where vaccines were needed urgently, as in the current meningitis outbreak in Kent).

It would also mean that the same rebates would have different VAT consequences depending on entirely unconnected decisions by the DHSC as to how it funds the NHS. It could, for example, change the funding model so that the sums currently paid by way of general funding for the purchase of drugs were not provided as part of a block grant. If the cost of drugs and medicines was repaid directly to trusts after they had incurred those costs to give the department more control of the drugs budget, this would appear to fall within the terms of the judgment to permit an adjustment of output tax by the pharma. However, the position for the pharma, and the VPAS system, would be exactly the same as it currently is. That is a prima facie breach of the principle of neutrality.

For further information, please contact Mitchell Moss.

Regulations have been laid to disapply the UK aggregates levy in Scotland from 1 April 2026. A separate instrument makes changes to the circumstances in which the Scottish aggregates levy applies, as well as other drafting amendments.

The Scottish Aggregates Tax (Miscellaneous Amendment) Regulations 2026 have been laid.

• These Regulations amend the Aggregates Tax and Devolved Taxes Administration (Scotland) Act 2024 (“the Act”) and the Scottish Aggregates Tax (Administration) Regulations 2025 (“the Administration Regulations”).
• Regulation 2(2) amends section 7 (commercial exploitation) of the Act to make provision about the circumstances in which the exploitation of a quantity of aggregate is not taken to occur in Scotland for the purposes of section 7(8) of the Act. Regulation 2(2) inserts a new subsection (9A) into section 7 of the Act to provide that the exploitation of a quantity of aggregate is not to be taken to occur in Scotland if two cumulative conditions are met.
• Regulation 3 amends the Administration Regulations to make a number of drafting amendments to improve the clarity of those Regulations and to correct typographical errors, as well as to make substantive amendments to regulation 37 (tax credits in relevant circumstances).

The Scotland Act 2016, Section 18 (Disapplication of UK Aggregates Levy) (Appointed Day) Regulations 2026 have also been laid, appointing 1 April 2026 as the day on which the UK aggregates levy is disapplied in Scotland in relation to commercial exploitation of aggregate.

For further information, please contact Helen Jamieson and Mitchell Moss.

Regulations have been laid in relation to the new excise duty for vaping products:

• The Vaping Products (Production, Duty Stamps and Commencement) Regulations 2026. These Regulations make provision in relation to a new excise duty for vaping products.
  
  
• The Vaping Duty Stamps (Requirements, Reviews and Appeals) Regulations 2026. These Regulations make provision in relation to a new excise duty for vaping products. Regulation 2 sets out when vaping products are required to be stamped.

For further information, please contact Craig Clark.

This notice provides information about:

• Supplies of taxable commodities to which the full rates of Climate Change Levy do not apply
• The certification and other procedures that you must follow to claim the reliefs

Sections 2.11, 3.11, 6.2, 10.1, 10.2 have been updated to reflect changes to the Climate Change Levy non-fuel use exemption.

For further information, please contact Richard Norman.

On 25 March 2026, the Government published the latest Guidelines for Compliance (GfC).

Help with VAT place of supply of services in the oil and gas sector – GfC18 explains how to determine the VAT place of supply of services for businesses operating in the oil and gas sector. It may also be of interest to businesses operating in wind and carbon capture and storage.

These guidelines set out the recommended approach to determining the place of supply, as well as information on:

• The special place of supply rules most relevant to the sector
• The general place of supply rules
• The fixed establishment rules
• Other factors that may affect the VAT treatment

HMRC states that GfC18 should be read alongside HMRC’s published guidance, and that following these guidelines will help businesses reduce the risk of making errors, therefore reducing the risk of any penalty charges.

The GfC explains how to amend VAT returns if necessary and also notes that HMRC’s Non-Statutory Clearance Service can be used where the place of supply of services is unclear and the supplier and recipient cannot agree (and where GfC18, the relevant legislation, HMRC guidance and VAT Notices have already been considered).

For further information, please contact Richard Norman.

HMRC has updated its guidance: Check if your drink is liable for the Soft Drinks Industry Levy.

New levy rates from 1 April 2026 have been added to the 'How much you'll pay' section.

For further information, please contact Thomas Mosley.

HMRC has updated its guidance: Get customs data for import and export declarations. The guidance confirms that this service can now be used to request customs data reports for XI (Northern Ireland) EORI numbers.

For further information, please contact Penny Isbecque or Michael McNeill.

HMRC has updated the information about the VAT treatment of guarantees and warranties in paragraph 3.7.2 in VAT Notice 701/36 Insurance. The updated guidance appears to soften slightly the link between the regulatory and VAT positions and it also provides additional comments on the grey area between insurance and a taxable supply of warranty or service plan arrangements.

For further information, please contact Simon Harris.

HMRC has launched a call for evidence seeking views on the taxation of stablecoins (cryptoassets that seek to maintain a stable value by reference to another asset). The Government notes that the current tax treatment of stablecoins may result in administrative burdens to individuals and businesses, and that the strong future use case for stablecoins in retail and wholesale payments may justify a tax treatment that diverges from that of other cryptoassets.

The government would like to hear from investors, professionals and firms that use stablecoins, including technology and financial service firms; trade associations and representative bodies; academic institutions and think tanks; and legal, accountancy and tax advisory firms.

The call for evidence closes on 7 May 2026.

For further information, please contact Simon Harris.

HMRC has published three documents relating to its work with software developers. It has published its strategic long-term approaches to third-party software and to external integration, and a policy paper on HMRC’s plans to strengthen standards for third-party software.

• HMRC’s Strategic Approach to Third-Party Software: This document sets out HMRC’s strategic approach to the third-party software that connects to the tax and customs systems. It explains how HMRC will work with providers, advisers and user groups to support a thriving market that helps customers meet their obligations through the tools they already use. The approach builds on two decades of collaboration between HMRC and the software sector and responds to growing reliance on integrated software across the tax and customs system. It describes HMRC’s role in stewarding the market, the principles that guide engagement and the actions HMRC will take to strengthen partnership, improve predictability and support reliable, high quality products for customers and intermediaries.
  
  
• HMRC’s Plan to Strengthen Standards for Third-Party Software: This document sets out HMRC’s proposed direction for strengthening standards for third-party software that integrates with the tax and customs system. It defines who will be in scope for strengthened standards and explains how they will complement existing requirements such as in the Developer Hub Terms of Use. It outlines the themes where standards will be strengthened, including product integrity, supporting correct outcomes, data accountability, error management, and misuse and fraud prevention. It also clarifies the distinction between provider-level and product-level standards. Finally, the document sets out how HMRC will define a clear and workable approach to how strengthened standards will be governed and upheld and provides a high level timeline for engagement, testing, and implementation through 2026 to 2027.
  
  
• HMRC’s Strategic Approach to External Integration: This document sets out HMRC’s approach to external technical integration, providing detail on HMRC’s relationship and ways of working with software providers. The approach builds on HMRC’s longstanding ambition to make it easier for customers to meet their tax and customs obligations through the software products they already use and aims to respond to growing demands for increased data sharing from software providers that support UK growth. This document focuses on external APIs as they are the current core enabler of a thriving software market, contributing to HMRC’s strategic objectives to deliver a seamless, automated tax and customs system.

For further information, please contact Ben Woodfield and Chiu Ming Man (FS).

HMRC has published research on the new points-based late submission system and revised late payment penalties, surveying 1,202 VAT businesses on awareness, fairness and behaviour – Impact of Penalty Reform on VAT Registered Businesses.

This research builds on earlier qualitative research with small businesses in 2024 to provide robust quantitative evidence on awareness, understanding, fairness, trust, and behavioural impacts among VAT registered businesses. Insights from this research will also help shape the forthcoming introduction of MTD for Income Tax, due to be rolled out in stages from April 2026.

For further information, please contact Sarah Delaney.

HMRC has published research on Electronic invoicing: SME usage and attitudes. This research looked at small and medium-sized enterprises’ (SME) use, awareness, and perceptions of e-invoicing. The quantitative stage was carried out by IFF Research between February and March 2025, which conducted a short survey of 800 businesses to estimate the prevalence of e invoicing use and awareness among SMEs.

The qualitative stage was then conducted by Ipsos between May and June 2025. This further explored attitudes towards e-invoicing through 45 in depth interviews with SMEs, including both users and non-users of e-invoicing.

HMRC has used the findings of this research to inform the development of e invoicing policy. The findings will also inform related communication campaigns and guidance, accounting for the needs and concerns of UK SMEs.

The views in these reports are the authors’ own and do not necessarily reflect those of HMRC.

For further information, please contact Chris Taylor.

HMRC has added guidance to the Construction Industry Scheme Manual on the measures introduced in the Finance Act 2026 to tackle fraud in the Construction Industry Scheme (CIS) which will have effect from 6 April 2026.

On 25 March 2026, HMRC added section CISR85000 to the Construction Industry Scheme Manual, providing guidance on the measures introduced in the Finance Act 2026 to tackle fraud in the Construction Industry Scheme (CIS) which have effect from 6 April 2026.

The guidance provides commentary on the following:

• HMRC's view of the indicators that would suggest that the business "knew or should have known" about the relevant compliance failure (CISR85030, CISR85050 and CISR85060) and how the "knew or should have known" test applies to officers (where HMRC seeks to attribute some or all of a company penalty to an officer) (CISR85150).
• The level of due diligence and risk assessment that HMRC expects when entering trading relationships or contracts with other businesses, and the consequences of failing to act on their results (CISR85080, CISR85090 and CISR85100).
• Penalties and mitigation including when it might be expedient to delay issuing a penalty (for instance when ADR might be undertaken: CISR85130), that given the penalty percentage (30%) penalties should not be mitigated to reflect the seriousness of the behaviour (CISR85140) and how a penalty attributed to an officer might be mitigated (CIR85180).

For more information, please contact Rachel Kennedy.

HMRC has updated UK Trade Tariff: duty suspensions and autonomous tariff quotas (ATQs) for importing goods into the UK. The guidance has been updated to reflect the launch of the 2025 to 2026 objections window for new duty suspensions.

HMRC has released the UK trade in goods by business characteristics 2024 statistics. UK trade in goods by business characteristics data shows details of international trade in goods by industry group, age group, business size, and business location. UK overseas trade in goods statistics (OTS) data has been linked with the Office for National Statistics (ONS) business statistics and UK trade in goods by business characteristics 2024: data tables.

The Government has issued a press release on measures to address late payments to small businesses.

The changes will include a new 60-day cap on payment terms on all large firms when paying smaller suppliers. New mandatory interest on late payments will also be introduced, with a requirement for all commercial contracts to include statutory interest set at 8% above the Bank of England base rate. The Small Business Commissioner will be given new powers to investigate poor payment practices, adjudicate payment disputes, and fine the worst offenders – with fines worth tens of millions for firms that persistently pay late or fail to comply with the new laws. Large companies will need to review payment practices at the audit committee level and disclose supplier payment performance. The Government also plans to ban the withholding of retention payments under construction contracts.

The Time To Pay Up: Government Response to 2025 Late Payment Consultation is also available.

In June 2023, the UK ETS Authority made a commitment to develop, then consult on, proposals regarding the claiming of emissions reductions from sustainable aviation fuels (SAF) by aircraft operators under the UK ETS.

The Authority is therefore seeking views on options for the future treatment of SAF in the UK ETS and to ensure that SAF is accounted for appropriately in the UK ETS, taking into account interaction with the UK Government’s SAF Mandate which came into effect on 1 January 2025. This consultation also considers potential operational changes to how SAF use under the UK ETS is regulated.

This consultation closes on 15 June 2026.

For further information, please contact Richard Norman.

Argentina

Argentina enacted Law No. 27,802 on 6 March 2026, introducing tax amendments alongside broader labour reform. The Law includes changes to income tax, VAT and excise taxes, aimed at reducing taxes in selected sectors. Key measures include inflation-adjustment for tax losses, VAT relief for agro-industrial energy use, repeal of excise taxes for specific goods and services and the creation of the Regime for Incentives to Medium-Sized Investments. Argentine businesses may wish to consider modelling the impact of these changes for FY2025 onward.

Spain

The Spanish Council of Ministers approved the Royal Decree implementing the mandatory business-to-business (B2B) electronic invoicing system in Law 18/2022 (the Create and Grow Law), which completes the regulatory framework required to implement the new system. The Royal Decree establishes the legal and operational framework for electronic invoicing between businesses in Spain, introducing structured electronic invoices and mandatory reporting of invoice status as key tools to promote digitalisation and combat late payments in commercial transactions. The requirements will enter into force on a phased basis, calculated from the publication of the forthcoming Ministerial Order setting out the technical specifications, with larger taxpayers becoming subject to the rules earlier than smaller businesses. With approval now being provided, the expectation is that the official publication will be issued before July 2026 with an expected go-live date to be early to mid-2027.

Netherlands

With effect from 1 April 2026, non-EU businesses may no longer file hard-copy (i.e., paper) requests to reclaim Dutch input VAT. Instead, they must file these refund requests via the Dutch tax authorities' portal website. Businesses must avail themselves of either a DigiD certification or eHerkenning (electronic recognition) to be able to do so. All further communication will also take place via this portal website. For non-resident businesses, the process of obtaining this certified access can be time-consuming. Therefore, they may wish to consider engaging a specialised (resident) agent to file any Dutch VAT refund claims in the name of and on behalf of the business.

The European Parliament and Council have reached an agreement on a major reform of the EU Customs Code to address problems relating to e-commerce, safety of goods and efficiency.

The reform is built on three pillars: smarter risk management and customs controls, a modern framework for e-commerce, and a stronger partnership with businesses.

A data-driven customs approach – At the heart of the customs reform lies the establishment of a new EU agency, the EU Customs Authority, to be located in Lille, France. It will coordinate and modernise customs operations across all 27 Member States. The EUCA will facilitate information-sharing and provide risk management at EU-level, thereby enhancing the harmonised implementation of EU customs legislation, as well as the detection and prevention of customs fraud across the Union.

A turning point for e-commerce – The reform introduces several targeted measures to address the rapid growth in e-commerce. The Commission and Member States agreed in November 2025 to remove the duty exemption that had been in place for parcels valued below €150. As a temporary solution, they decided to introduce a €3 duty on these parcels, starting 1st July 2026. This latest agreement also introduces a handling fee on goods imported into the EU, to compensate for the increasing costs for customs authorities. The amount of the fee will be determined in a delegated act and be based on the minimum costs customs authorities face when processing goods. The costs arise from the IT and labour resources mobilised to release those goods for free circulation, including checking the data provided, carrying out risk analysis, and performing regular documentary and physical controls when needed. The fee will be introduced no later than 1 November 2026.

In the future, e-commerce operators will bear more responsibility. Online platforms and sellers will inform customs through the EU Customs Data Hub about their sales immediately after they happen. This will allow customs to react even before the goods arrive at the border. These operators will also be liable to ensure compliance with EU legislation applicable to their products, including fiscal and non-fiscal rules. Specific penalties may apply in case of systematic non-compliance.

Please also refer to:

• European Council Press Release
• Commission welcomes historic agreement to reform EU Customs Union
• Questions and answers on the EU Customs Reform
• Commission welcomes selection of Lille as seat for EU Customs Authority

For further information regarding Global Trade please contact Gerard Koevoets.

The European Commission has launched a consultation on e-invoicing: Electronic invoicing – revision of EU rules. All members of the public, public authorities and other stakeholders (e.g. businesses including SMEs, business associations, e-invoicing service and solutions providers, non-governmental organisations, civil society organisations, academia) are invited to respond to this consultation.

The consultation aims to ensure that relevant stakeholders can provide their views, evidence and experience regarding the key challenges and opportunities for the revision of the e-invoicing Directive. This will feed into the evidence base underpinning the impact assessment and allow the Commission to take a broad array of views and input into consideration when defining the problem, designing the potential solutions and assessing their possible impacts.

Our global tax alert is available here.

For further information, please contact Chris Taylor.