Weekly VAT News

Please join us for our forthcoming webcast – How e-invoicing is redefining compliance, from obligation to strategic value. There are two webcast dates/times available to cater for different time zones – Tuesday 16 June (15:00-16:00 BST) and Wednesday 17 June (08:00-09:00 BST).

In this webcast, EY panelists will discuss how e-invoicing drives strategic value for businesses, beyond compliance, and will share insights from jurisdictions mature in e-invoicing adoption. Topics covered include:

• Global e-invoicing mandates and their impact on businesses
• The importance of data readiness and considerations for e-invoicing implementations
• How e-invoicing can deliver value beyond compliance

To confirm your attendance, please register here. Should the scheduled time not align with your current commitments, we still encourage you to register. This will ensure you have access to the on-demand replay and presentation slides, allowing you to participate at your convenience.

We hope you will be able to join us for what is sure to be an informative and engaging session.

We are pleased to invite you to the next Indirect Tax Perspectives event on Thursday, 18 June. The event will be held in person and will take place at our London Office at 1 More London Place, London, SE1 2AF.

The session will run from 9:45 to 11:15, with networking and refreshments available from 8:45.

Our agenda will include:

• A round-up of the latest indirect tax topical issues including recent HMRC activity
• Key themes from our Global Indirect Tax Symposium – from fast moving AI development and what it means for your business, to unlocking value in data, tax authority audit activity and key technical topics
• Data-driven tax – getting it right first time and data readiness planning for UK e-invoicing
• UK CBAM countdown to 1 January 2027 – a practical overview of the regime and what it means for your business

We hope you will be able to join us and look forward to hosting you. If you would like to forward this invite to your colleagues, please feel free to do so.

Please register for this event here.

For further information please contact Sarah Delaney.

We are pleased to invite you to our EY Technology, Media and Telecommunications (TMT) VAT roundtable event for businesses in the TMT sector. The event will take place following our Indirect Tax Perspectives event at our London Office at 1 More London Place, London, SE1 2AF on Thursday, 18 June and will run from 12:00 to 13:00, with networking and refreshments available before the event from 11:15.

During the event, we will do a deep dive into specific VAT technical topics relevant for businesses in the TMT sector.

We are also interested in hearing from you and so, if there are specific topics which you would like to discuss, please let us know in the registration form. 

If you would like to join us for this event please register here.

Trade Talking Points is our fortnightly newsletter on the latest insights from EY's Trade Strategy team.

In this edition we provide updates on trade policy developments, including the outcomes of President Trump’s state visit to China, the EU Council and EU Parliament reaching a provisional agreement on the EU-US Joint Statement, and the UK and the Gulf Cooperation Council (GCC) signing the UK-GCC Free Trade Agreement.

The latest edition of Trade Lines is available (to 29 May 2026). Produced by the US, it is intended to provide timely insights into the issues shaping global commerce – from tariff shifts and supply chain disruptions to legislative developments and compliance trends.

This issue includes updates on the bilateral negotiations between the US and Mexico ahead of the Joint Review of the US-Mexico-Canada Agreement (USMCA), the Quad Foreign Ministers’ Meeting, the discussion on a final trade agreement between India’s Prime Minister and the US, a trade agreement with Taiwan, the progress of Section 122 tariffs refunds, and onshoring agreement applications for reduced pharmaceutical tariffs.

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

HMRC has published its Freeports technical handbook, providing guidance on the Freeport customs procedure and using or operating a Freeport customs site. It doesn’t cover Freeport tax sites or their direct tax incentives and reliefs.

Following the Government’s cost-of-living measures announced on 21 May, the Department for Business and Trade has now published its call for input on the tariff suspensions on agricultural goods, fertilisers, and kerosene to help mitigate the consumer impact of the conflict in the Middle East. The consultation closes on 24 June 2026. Please refer to Call for input on goods for cost of living tariff suspensions.

The conflict in the Middle East has put significant upward pressure on prices for consumers. In response to this, the Government is exploring whether the temporary suspension of import tariffs could lead to benefits for households and families.

The Government recognises that temporary tariff reductions may have unforeseen effects on domestic business and other UK stakeholders. It is therefore seeking stakeholder views through this call for input on the goods considered within this second cost of living tariff suspensions package.

Please also refer to:

• UK Trade Tariff: duty suspensions and autonomous tariff quotas
• Press Release

India and New Zealand have signed a free trade agreement (FTA) which aims to boost exports, micro, small and medium enterprises, investment flows, skills mobility and economic cooperation.

Please refer to our Global Tax Alert for further details.

For further information please contact Marc Bunch or Ross Freeman.

Wednesday 3 June

Judgment – T-198/25 – G Kft. (Régularisation de la TVA après un contrôle fiscal)

Topics – Correction and refunding of VAT improperly invoiced – closed period

A Hungarian referral which asks whether Articles 167, 168, 179, 180, 183, 250 and 252 of the VAT Directive, together with the principles of tax neutrality, effectiveness and proportionality, must be interpreted as permitting domestic legislation to the effect that, in relation to a period closed by means of an inspection, the correction and refunding of VAT improperly invoiced is only possible if there are new facts and circumstances that demonstrate that the taxable person did not previously have, nor could in good faith have had at its disposal, or of which the taxable person was not, nor could in good faith have been aware, even if there was no risk of any loss of tax revenue.

Wednesday 10 June

Judgment – T-444/25 – Cavert

Topics – VAT grouping eligibility – exempt medical care

A Dutch referral concerning a VAT group comprised of five entities, including two foundations and three private limited companies, providing various care services for individuals with intellectual disabilities. Only one foundation is officially recognised as a care institution, exempting its services from VAT. The referral asks whether Article 11 of the VAT Directive, read in conjunction with Article 132(1)(b) and (g), must be interpreted as meaning that the exemptions referred to therein apply only in so far as the supplies of the VAT group referred to in those provisions are made to third parties for consideration by a legally independent member of the VAT group which, considered individually, meets all the conditions for the application of those exemptions. If answered in the negative, is it sufficient for the applicability of Article 132(1)(b) and (g) and Article 133 in respect of all supplies referred to in those provisions made by the VAT group to third parties for consideration that only one legally independent member of the VAT group satisfies all the conditions for the application of those exemption provisions.

Thursday 11 June

Opinion – C-308/25 – Isolanti Group

Topics – Simplified resolution mechanism – exclusion of disputes involving VAT on imports but not the resolution for intra-Community VAT disputes

An Italian referral which asks whether Article 4(3) of the Treaty on European Union and Articles 250 and 273 of the VAT Directive preclude national legislation which provides for a simplified resolution mechanism, which excludes disputes involving VAT on imports but allows resolution for intra-Community VAT disputes. The referring court questions whether the simplified resolution mechanism violates EU obligations to ensure full VAT collection and equal treatment of taxpayers.

Wednesday 17 June

Judgment – T-184/25 – Veronsaajien oikeudenvalvontayksikkö (Exonérations – gestion de crédits effectuée par celui qui les a octroyés)

Topics – VAT exemption – management of credit

A Finnish referral which asks whether Article 135(1)(b) of the VAT Directive, which concerns the exemption from tax of the management of credit by the person granting it, is to be interpreted as also covering the case where an undertaking continues to manage credit which it has itself granted and has sold to another financial institution. If the answer to the first question is in the negative and the management of credit by the former undertaking concerns credit serving to secure a bond issued by another financial institution, is Article 135(1)(c) of the VAT Directive, which concerns the exemption from tax of any dealings in credit guarantees or any other security for money, to be interpreted as also covering the case where the former undertaking manages credit serving to secure a bond issued by another financial institution. If the answer to the second question is in the negative, is Article 135(1)(d) of the VAT Directive, which concerns the exemption from tax of transactions concerning debts, to be interpreted as also covering the case where the former undertaking manages debts transferred to another financial institution.

Topics – Output tax liability – supplies made through Amazon marketplace – mistakenly treated as a non-established taxable person

HBS Enterprises Ltd

The First-tier Tribunal (FTT) has released its decision in this case concerning VAT assessments raised by HMRC against HBS Enterprises Ltd (HBS) for supplies made through Amazon marketplace in respect of the quarters ending May 2023, August 2023, November 2023 and February 2024.

HBS is a UK registered business engaged in online retail sales via marketplaces such as Amazon and eBay, with all goods fulfilled from within the UK. During the relevant periods, HBS made a large number of sales through Amazon, and Amazon generated detailed VAT Transaction Reports identifying, among other things, which party it considered was responsible for accounting for VAT.

For certain transactions, Amazon treated itself as responsible for collecting and remitting the VAT. From September 2023 onwards, the volume of these transactions increased dramatically because Amazon treated HBS as a non-established taxable person (NETP), meaning it considered that the ‘online marketplace deeming provisions’ applied. As a result, HBS treated those transactions as zero-rated on its VAT returns, on the basis that Amazon was accounting for VAT directly to HMRC. HBS’s position was influenced by the fact that HMRC systems had incorrectly identified it as a NETP, including displaying an incorrect address associated with non-UK traders.

Having identified the error, HMRC subsequently raised assessments for additional output VAT on the basis that the sales should not have been treated as zero-rated.

HBS asserted that:

• The assessments incorrectly added VAT to transactions upon which it had already accounted for the VAT. In other words, although HMRC had intended just to correct the treatment of those supplies that HBS had treated as zero-rated, in fact their calculations double counted the output tax upon transactions on which HBS had already accounted for VAT
• The assessments wrongly assessed HBS for VAT on transactions where Amazon had already accounted for VAT. This was as a result of HMRC’s own error in identifying HBS as a NETP; the assessments would therefore result in unlawful double taxation. HBS did however accept that it was at all times a taxable person in the UK
• The assessments incorrectly treated non-UK transactions as standard rated taxable supplies
• The assessments were not made to best judgment; HMRC did not check with Amazon whether it had accounted for VAT on the transactions, the Officer did not check whether some part of HMRC had treated HBS as a NETP or why, and he had not analysed the underlying evidential material properly

HMRC argued that the principle behind the assessments was to assess output tax on the Amazon transactions that HBS had treated as zero-rated. It did not accept that the assessments had failed to do this. Also, the fact that Amazon may have accounted for VAT on certain transactions does not change the legal position that those transactions were not made by a NETP and HBS must account for VAT on its supplies. Finally, the assessments were made to best judgment.

The FTT recalled that VAT is chargeable on taxable supplies of goods or services made in the UK by a taxable person in the course of business under section 4, VATA94. A taxable person is one who is registered or required to be registered under VATA94, and such persons must account for output tax on their supplies and may deduct input tax to determine their net liability. Section 7, VATA94 provides that supplies of goods are made in the UK only if the goods are located in the UK at the time of supply; accordingly, exports are generally outside the scope of UK VAT. Section 73, VATA94 empowers HMRC to assess VAT where it considers returns to be incorrect, and such assessments may be appealed to the Tribunal. Of particular importance in this case are the online marketplace provisions in section 5A, VATA94, under which, in certain circumstances involving non-UK sellers, supplies are deemed to have been made first to the marketplace operator and then to the customer, with the operator bearing the liability to account for VAT.

The FTT firstly considered whether HMRC’s assessments correctly calculated HBS’s VAT liability. It found that HMRC had made a fundamental computational error. Although HMRC intended to assess output VAT only on the Amazon sales that HBS had treated as zero-rated, in practice it calculated VAT by reference to total Amazon sales and added that amount to the VAT already declared in HBS’s returns. This resulted in double counting, as HBS had already accounted for VAT on all other sales. The only amounts excluded from its returns were the ‘Amazon responsibility transactions’, the value of which was significantly smaller in earlier periods. The FTT concluded that the assessments had substantially overstated the tax due because they failed to isolate the specific transactions that had been treated as zero-rated.

The FTT then considered HBS’s core argument that it should not be liable for VAT on the UK transactions classified by Amazon as its responsibility. HBS argued that Amazon had undertaken to account for VAT, and that any additional assessment would result in double taxation, particularly as Amazon had deducted VAT from HBS’s proceeds. The FTT rejected this argument, holding that, as a matter of law, HBS was a UK established taxable person throughout the relevant period, meaning that the marketplace deeming provisions in section 5A did not apply. Consequently, the supplies in question remained supplies made by HBS and it was obliged to account for output VAT. The fact that Amazon may have accounted for VAT did not discharge HBS’s liability, because Amazon would have done so on the mistaken basis that it was the ‘deemed supplier’. Any such accounting would therefore relate to Amazon’s own perceived liability, not HBS’s actual liability under the law. Similarly, any errors by HMRC in misclassifying HBS as a NETP did not alter the legal analysis of the supplies or HBS’s statutory obligations.

However, the FTT accepted an important distinction in relation to non-UK transactions. It found that a number of the ‘Amazon responsibility transactions’ were genuine exports. Under section 7, VATA94, such supplies are treated as made outside the UK and therefore fall outside the scope of UK VAT. Accordingly, they do not give rise to UK output tax. The FTT concluded that HMRC had incorrectly treated these transactions as taxable. For the earlier periods (May and August 2023), all the Amazon responsibility transactions were non-UK supplies, meaning that HBS’s original VAT returns were correct and no additional VAT was due. For the later periods (November 2023 and February 2024), only some of the transactions were non-UK supplies, requiring a revised calculation to exclude those amounts and identify VAT only on the remaining UK transactions.

On the issue of ‘best judgment’, the FTT found that HMRC had satisfied the relevant legal standard. Although the assessments were flawed in calculation and the officer had not investigated all aspects of HBS’s assertions – such as whether Amazon had actually remitted VAT or the reasons for the NETP misclassification – the FTT accepted that the officer had acted honestly and made a genuine attempt to determine the tax due. Under principles established through prior case law, this was sufficient to meet the statutory requirement, and the existence of errors did not invalidate the assessments. Instead, the FTT exercised its jurisdiction to substitute or vary the amounts to reflect the correct tax liability.

In conclusion, the appeal was allowed in part. The FTT set aside the assessments for the May 2023 period entirely and for August 2023 except for an unrelated input tax adjustment, on the basis that no additional VAT was due. The assessments for November 2023 and February 2024 were varied, with directions for the parties to recalculate the correct output tax by excluding non-UK transactions and applying VAT only to UK sales that had been wrongly treated as zero-rated.

Comments: This decision underscores that VAT liability depends on the correct application of statutory rules to the supplier’s status and the nature of the supply and cannot be displaced by mistaken treatment by intermediaries or administrative errors by HMRC, even where this results in apparent inequity for the taxpayer. Businesses should ensure they correctly identify who is legally responsible for accounting for VAT on marketplace sales, rather than relying solely on platform classifications.

For further information please contact Andy Jones.

This tax information and impact note details changes to rates of Fuel Duty for 2026 to 2027.

This measure extends the temporary 5 pence per litre (ppl) cut in the rates of Fuel Duty, first introduced at Spring Statement in March 2022, until 31 December 2026. The measure also provides a further reduction to the rebated rate for gas oil (red diesel), biodiesel and bioblend by 3.7 ppl from 15 June 2026 to 31 December 2026. The legislative default will be for rates to return to the levels set at Budget 2025 from 1 January 2027, but the government will confirm final rates at Budget 2026.

Please also refer to Amended Fuel Duty rates: 2026 to 2027.

This Notice explains what happens when you opt to tax (charge VAT on) land and buildings, when you need permission and when to notify HMRC about your decision. Section 12.1 has been updated to clarify that where an opted land or building remains an asset on hand at the point of VAT registration cancellation, output tax must be accounted for. Information about a temporary change to the time limit for notifying an option has also been removed as it ended on 31 July 2021.

Please also refer to Tell HMRC about an option to tax on property as part of cancelling your VAT registration.

For further information please contact Ali Anderson.

This Notice provides the text of the notices made under the Customs (Northern Ireland) (EU Exit) Regulations 2020. It has been updated to take account of new facilitations within the duty reimbursement scheme (DRS) for customs duty amounts incurred when goods are brought into Northern Ireland. These new facilitations allow UK businesses to switch an amount of relief previously granted under the customs duty waiver scheme to an award under DRS. It also enables DRS claims to be made where it is not practical for a business to monitor the use of each individual item held within a common stock of interchangeable goods.

This Guidance explains how to declare your goods so that the correct duty is applied, including where this is zero duty. Information has been added about reclaiming state aid used to waive ‘at risk’ duties on goods which have not entered the EU through the Duty Reimbursement Scheme, also known as a 'replenishment claim'.

Please also refer to:

• Check if you can claim a waiver for goods brought into Northern Ireland
• Apply to claim a repayment or remission of import duty, or reclaim state aid used on ‘at risk’ goods brought into Northern Ireland
• Claim a waiver for duty on goods that you bring to Northern Ireland from Great Britain or countries outside the UK and EU

For further information regarding Northern Ireland please contact Michael McNeil or for global trade Gerard Koevoets.

This Guidance is the main reference guide to VAT, it provides: a guide to all the main VAT rules and procedures, help with the problems faced by business and references to more specialised publications. Section 16.8 has been removed for invalid invoice procedures. Sections 19.5.3, 19.5.4 and 19.5.5 have been added for when you do not hold a VAT invoice.

HMRC has published its Internal Manual on the Advance Tax Certainty Service.

The new service, which launches on 1 July 2026 and with expressions of interest accepted from 1 June, will provide businesses with a binding clearance on how the tax rules will apply to a major investment project from before the final investment decision is taken up until the relevant tax return is made.

Under this service, the clearance can cover uncertainties relating to the following UK taxes:

• Corporation tax
• VAT
• Stamp duty land tax
• Income tax
  • PAYE regulations
  • Construction Industry Scheme

The service will not cover transfer pricing, but where appropriate the existing Advance Pricing Agreement programme is available.

Please also refer to:

• Advance Tax Certainty Service
• Advance tax certainty for major projects consultation
• Finance Act 2026

Tanzania

The Court of Appeal has issued a landmark decision which clarifies that demurrage charges do not constitute a taxable supply under the Value Added Tax Act, 2014 and are therefore not subject to VAT. In the shipping industry, demurrage charges refer to the fees levied on importers or consignees when they fail to return shipping containers to the carrier or designated terminal within the agreed free period, known as laytime. These charges are intended to compensate the carrier for the loss of use of the container and to encourage timely return, ensuring efficient circulation of equipment within the supply chain. The Court's ruling provides clarity to taxpayers operating in the shipping and transportation sectors.