EY VAT News week to 6 March 2017

Transcription

1 Click here to view online EY VAT News week to 6 March 2017 Welcome to the latest edition of EY VAT News, which provides a roundup of indirect tax developments. If you would like to discuss any of the articles in more detail, please speak with your usual EY indirect tax contact or one of the people below. Previous editions of EY VAT News can be found here. In this edition: EY Events Spring Budget 2017 Webcast Spring Budget 2017 and OTS review, podcast EY Resources Launch of new Worldwide Indirect Tax Developments Map on ey.com Publication of Indirect Tax in Court of Justice of the European Union Opinions: The VAT cost sharing exemption cannot apply to financial services institutions or cross border operations Order: Taxpayer cannot be denied the right to deduct VAT without consideration to the question of whether he knew or should have known of involvement in a fraudulent transaction Opinion: The different treatment regarding output tax and input tax Fleming claims is compatible with EU law Calendar update Upper Tribunal Default Surcharge VAT payments can be allocated to VAT not yet due First-tier Tribunal Zero rating can apply to supplies of construction services for a residential property supplied prior to the discharge of a planning condition preventing its separate disposal when that condition was removed after commencement, but before completion, of the construction works EY Global Tax Alerts Switzerland VAT rates may be reduced as of 1 January 2018 GCC Preparation for GCC VAT by 1 January 2018 requires immediate action Australia Introduction of legislation on GST on low value imports from 1 July 2017 Netherlands Revision to Insurance Premium Tax decree India Union Budget 2017 emphasises digitisation, technology and e- commerce

2 Italy: Amendments to VAT compliance obligations for 2017 Office of Tax Simplification Interim paper on the review of VAT European Commission Consultation on the functioning of the administrative cooperation and fight against fraud in the field of VAT OECD Fourth meeting of the OECD Global Forum on VAT EY Events Spring Budget 2017 Webcast The Chancellor, Philip Hammond, will deliver the last Spring Budget on 8 March. While some measures may be kept back for the first Autumn Budget later in 2017, we expect he will aim to build on the strengths of the UK economy and tackle the longterm weakness he identified previously while being mindful of the Government's priorities for its negotiations with the EU. From a business tax perspective, there may be less new measures than we are used to. Instead focus may be on the stillmoving content for this year's Finance Bill and other ongoing consultations. We have now had most of the promised legislation but some is still outstanding and there are likely to be changes to the draft legislation already provided. HMRC has held meetings across the spectrum of tax changes proposed and we may see further draft legislation issued on Budget day itself in advance of the Finance Bill on 20 March, possibly with responses to outstanding consultations or technical notes in areas where guidance is not yet available. Join us on 9 March 2017 at 3:00 pm for our next Tax Focus webcast where Claire Hooper, Chris Sanger, David Kilshaw and the EY ITEM Club's Martin Beck will discuss the economic backdrop to the Budget, the implications of the tax measures announced and the progress of the ongoing changes to be included in Finance Bill Spring Budget 2017 and OTS review, Podcast From an indirect tax perspective, there will undoubtedly be the usual increase in VAT registration and deregistration thresholds. Other than that, we are not currently aware of any other major proposed changes to indirect tax. Although, that is not to say that major indirect tax changes won't appear on the day of course! Whilst few indirect tax changes are predicted for the Spring Budget, the Office of Tax Simplification's VAT review recommends a future overhaul. Andy Bradford, based in our Indirect Tax team in London has recorded a podcast on the key details. To listen to the podcast, click here. EY Resources Launch of Worldwide Indirect Tax Developments Map Keeping up to date with developments in indirect taxation is a full-time job. Every day seems to bring new indirect taxes, rate changes, and new reporting and compliance obligations. Global businesses must keep track of all these changes both those that have happened and those that are coming down the line. In order to help, we have now launched our Worldwide Indirect Tax Developments Map on ey.com. Our interactive map is designed to help you keep abreast of significant changes happening around the world in value-added tax and goods and service tax (VAT/GST), global trade, insurance premium tax (IPT) environmental and excise taxes. The at-a-glance display shows what is happening with brief details about what is changing and where and when each change is taking place.

3 By filtering the information by jurisdiction, tax type, type of change and date, you can focus on the topics and jurisdictions that matter most to you, providing a bespoke summary that you can download as a pdf placemat or image. For each entry, a link allows the reader to learn more about the development or to contact an EY tax professional for more detailed guidance. Publication of Indirect Tax in 2017 To accompany the Worldwide Indirect Tax Developments Map, we have published our latest insights into the current trends in indirect tax around the world: Indirect Tax in We have published three new insight pieces: 1 VAT, GST and sales tax trends in 2017: there are five trends and themes emerging from recent developments in VAT/GST around the world: * VAT/GST rates are stabilizing but they are still high * Reduced VAT/GST rates and exemptions are making a comeback * The worldwide spread of VAT/GST continues * Digital tax measures continue to spread * Tax administrations are also embracing technology Read more 2 Excise tax policy: an interview with Professor Sijbren Cnossen (Erasmus University, Rotterdam): In an interview with Ros Barr, Professor Sijbren Cnossen discusses the tax policy implications of excise taxes including global trends and regional differences and the compliance burden faced by multinational companies. Read more 3 Tax policy options to support climate change and sustainability: This informative article by Jeff Saviano and Dominick Brooks gives an overview of carbon pricing, discusses current and future carbon taxes, carbon tax policy considerations and how EY can help. Read more For more information on the Worldwide Indirect Tax Developments Map or Indirect Tax in 2017, please contact Caitlin Hartley or Mary T O'Hare. Court of Justice of the European Union Opinions: The VAT cost sharing exemption cannot apply to financial services institutions or cross border operations C-326/15 DNB Banka and C-605/15 Aviva On Wednesday, 1 March 2017, the Court of Justice of the European Union (CJEU) released two Advocate General (AG) opinions concerning the operation of the EU VAT cost sharing exemption (CSE). The CSE, which is provided for under Article 132(1)(f) of the VAT Directive, applies when two or more organisations (whether businesses or otherwise) with exempt and/or non-business activities join together on a co-operative basis to form a separate, independent entity, a cost sharing group, to supply themselves with certain qualifying services exempt from VAT. These services must be directly necessary for each member's exempt/non-business activities and must also be delivered at cost under the exact reimbursement criterion. Finally, application of the CSE cannot produce a distortion of competition. Because of these complex criteria and due to EU Member States interpreting the CSE rules differently, taxpayers have been left with uncertainty around how and where the exemption can apply. In the Latvian case of DNB Banka and the Polish case of Aviva, the AG has opined as follows to the list of questions referred to the CJEU:

4 The CSE provider does not need to be a separate legal person but it must be a taxable person in its own right The CSE should only apply to services supplied to businesses, whose activities fall under Article 132(1) of the VAT Directive. This list does not include financial or insurance services which are listed elsewhere The application of a transfer pricing mark-up means that the exact reimbursement test is not met and CSE groups should not operate cross-border. This is on the basis that they would be difficult to manage from a practical perspective and may also lead to a loss of VAT revenue. The Opinion in Aviva also discusses the distortion of competition criterion, but notes that its application is a matter for national courts. In reaching her conclusions, the AG places importance on the fact that the CSE sits in the list of exemptions for activities in the public interest rather than the list of other exemptions. She also suggests that as VAT grouping is available to Member States, difficulties regarding the interaction of transfer pricing and exact reimbursement can be avoided. Comments: In other ongoing litigation, the AG has also opined that various aspects of Luxembourg's CSE rules were incompatible with EU law. In particular, she argued that Luxembourg's CSE was too generous, resulting in an over-recovery of VAT and too many services falling to be exempt. In addition, infringement proceedings launched by the Commission against Germany in relation to the CSE were heard by the CJEU in February This challenge results from the narrow implementation of the German CSE which is currently limited to those operating in the health and welfare sector. These proceedings have a clear overlap with the DNB Banka and Aviva cases. Should these Opinions be followed (either in full or in part) by the CJEU, the benefits of the CSE are likely to be reduced significantly, and especially so for financial services providers. From a UK perspective, use of the CSE is not commonplace. This is due to both the uncertainty around its operation as well as the widespread use of VAT grouping. However, businesses have begun to focus on the CSE as a response to various developments, including potential changes to VAT grouping as a result of the CJEU's decision in Skandia. The CSE is used extensively in a number of EU Member States, including France and Luxembourg. Where the CJEU follows these Opinions, taxpayers should consider the impact of any potential withdrawal of the CSE and alternative options that may be available. This is likely to include discussions around the introduction of VAT grouping in those jurisdictions which are yet to implement the relevant provisions into their national law. For further information please contact Simon Harris or Damian Shirley. Order: Taxpayer cannot be denied the right to deduct VAT without consideration to the question of whether he knew or should have known of involvement in a fraudulent transaction C-446/15 Signum Alfa Sped Kft case determined by Order of the Court The Court of Justice of the European Union (CJEU) has a procedure whereby, if it believes that the answer to a referral is sufficiently clear (e.g. the answer may be clearly deduced from existing case-law), it can determine the case by the issue of an Order, without the need for a full Court hearing or a written Advocate General's Opinion. The procedure has been used by the CJEU in relation to this Hungarian referral concerning the right of input tax deduction in respect of transactions considered by the tax authorities to be suspicious, in the presence of irregular conduct on the part of the supplier, and the onus on the taxable person wishing to exercise the right to deduct to undertake checks on its supplier. The CJEU has disposed of this referral by the issue of an Order to the effect that the provisions of the VAT Directive must be interpreted as meaning that they preclude a national practice under which the tax authorities refuse a taxable person the right to deduct VAT which is payable or paid in respect of services supplied to it unless it is established, in the light of objective factors and without the taxable person being required to carry out checks not required of it, that that taxable person knew or should have known that those services were involved in VAT fraud, which is for the referring court to ascertain. Comment: Any businesses which have had input tax recovery denied in similar circumstances may wish to revisit the decision. Opinion: The different treatment regarding output tax and input tax Fleming claims is compatible with EU law C-38/16 Compass Contract Services Limited

5 On 2 March 2017, the Court of Justice of the European Union (CJEU) delivered the opinion of Advocate General Campos Sanchez-Bordona (AG) in this UK referral from the First-tier Tribunal (FTT) asking whether the different treatment of output tax and input tax Fleming claims (where the former could be made for periods ending before 4 December 1996 and the latter for periods ending before 1 May 1997) breaches any principles of EU law. Compass Contract Services Limited (Compass), a catering business, supplies (inter alia) cold food and in 2006 it was accepted that certain supplies on which it had charged and accounted for VAT should have been zero rated. Compass sought repayment of the output tax overpaid but HMRC only accepted the claim up to 31 October 1996 suggesting that the remainder of the claim was time barred. Compass appealed the decision to the FTT which referred the case to the CJEU to consider whether the difference in treatment between output tax and input tax claims breaches any principles of EU law and if so how claims for the period 4 December 1996 and 30 April 1997 should be treated? The AG found that the existence of two dates regarding the different types of claims arose as a result of the chronological progression of the UK legislation introducing a reduction to the time limit for making claims from 6 years to 3 years (capping provisions). Due to an inadvertent anomaly the UK authorities made an amendment to the capping provisions with effect from 1 May 1997 in order to ensure that both output tax and input tax claims were subject to the 3 year cap. The legislator did not apply the new measures with retrospective effect and therefore the difference at issue is a result of the actions intended to bring the rules governing the two types of claims in to line with one another. The AG opined that a claim for a refund of overpaid VAT cannot be considered equivalent to a claim for deduction of VAT as the latter is a basic principle of the common system of VAT established by the EU whilst the former is derived from general EU law. It follows that those differences can lead to different legal rules governing each of those rights and it is for each Member State to determine the conditions under which claims for repayment of VAT may be made. EU law does not require the rules to be identical. The AG concluded that the existence of two dates with effect from which the three-year period for each type of claim was to be applicable raises no issues of incompatibility with EU law. Having concluded that the difference in treatment is compatible with EU law, the AG opined that there was no requirement to answer the second question referred. However, in case the CJEU were to disagree the AG did provide the following observations regarding how a claim of overpaid VAT should be treated. The AG suggested that any claim would have to be considered within the principle of equal treatment per national law so as to ensure that any remedy is not contrary to EU law. So as to avoid discrimination an output tax claim would have to be treated the same as an input tax claim, the tax authorities would need to repay the overpaid output tax unless national law provides an alternative remedy. The AG considered that it would not be acceptable for the unequal treatment to be remedied by making the input tax deadline earlier. Comment: This will undoubtedly be a disappointing result for those hoping to extend output tax claims to cover the additional period. Businesses with claims for overpaid output tax in the periods between 4 December 1996 and 30 April 1997 may wish to consider submitting a protective claim in the event that the CJEU disagrees with the AG. We await to see if the CJEU follows the AG's opinion. Calendar update Tuesday 7 March 2017 Judgment C-390/15 Rzecznik Praw Obywatelskich Polish referral challenging the validity of EU law insofar as it excludes books published in digital format and other electronic publications from the reduced rate of VAT. Thursday 9 March 2017 Judgment C-573/15 Oxycure Belgium Belgian referral asking whether the application of a reduced rate of VAT for oxygen treatment is compatible with EU law and, more specifically, whether oxygen treatment provided by different means may be subject to different VAT rates. Thursday 16 March 2017 Judgment C-493/15 Identi Italian referral asking whether national legislation which provides for the cancellation of a taxable person's VAT debts upon admission to the bankruptcy discharge procedure is compatible with EU law.

6 Judgment C-211/16 Bimotor An Italian referral asking whether national legislation providing for the offsetting of VAT claims against other tax debts is compatible with EU law. Tuesday 21 March 2017 Hearing C-574/15 Mauro Scialdone Italian referral, made in criminal proceedings, concerning the compatibility with EU law of national provisions relating to penalties for non-payment of VAT and the interaction with national provisions relating to penalties for non-payment of income tax. Thursday 6 April 2017 Opinion C-132/16 Iberdrola Inmobiliaria Real Estate Investments Bulgarian referral concerning the right of a taxable person (the tenant) to deduct input tax in respect of services relating to the construction or improvement of a property owned by a third party (the landlord). The referral appears to raise the question of whether the building works should properly be treated as supplied either to the tenant, who uses the property for the purpose of its taxable business, or the landlord, who will benefit from the improved property at the end of the lease term. Upper Tribunal Default Surcharge VAT payments can be allocated to VAT not yet due Swanfield Limited and others The Upper Tribunal (UT) has released its decision in the case of Swanfield Limited and others. The case considers, in the context of the default surcharge regime, whether a payment to HMRC can be allocated to the current VAT period or whether HMRC can allocate payments made by taxpayers to historic VAT liabilities. The effect of allocating a payment to VAT due for the current period is that there is no default in respect of that period (although the taxpayer remains in default for previous period(s)). Under the default surcharge regime, it is irrelevant to the amount of the surcharge how late the VAT is paid if it is paid after the due date. This means that it may be in a taxpayer's interest for a payment to be allocated to a current period where the VAT is not already overdue for payment, rather than to historic VAT liabilities. This is because any default surcharge in respect of the historic liability will not be increased, but a surcharge liability for the later period(s) may either be avoided entirely, or reduced. The First-tier Tribunal (FTT) noted that both parties accepted that pursuant to common law the appellants could allocate payments to debts as they chose if they requested to do so before payment, and agreed with HMRC's argument that, where no allocation was requested by the appellants, HMRC was entitled to allocate payments to the oldest debt. However, the FTT ruled in favour of HMRC and held (i) that VAT for a period does not become a debt until the last date for payment (usually the end of the month following the relevant accounting period), and (ii) that as a matter of law the appellants could not effectively allocate a payment to a liability that had not yet become a debt. The practical consequence is that a taxpayer cannot request the allocation of a payment of VAT to a current period (or indeed to a period which is complete but where the payment is made before the due date). The UT first considered the question of whether there can be a debt for the purpose of the default regime even though it has not yet fallen due for payment. The UT noted that Section 1(2) VATA provides that VAT on a supply of goods or services becomes due at the time of supply. The taxpayer who makes a taxable supply is therefore liable to pay the output tax on the supply to HMRC and even though he does not have to actually pay the VAT until the due date he is nonetheless in debt to HMRC. Accordingly, the UT found that the FTT made an error in law and there is no reason why a taxpayer should not be allowed to request for the allocation of a payment to a debt that has been incurred even if the due date for payment of that debt has not arrived. The UT also considered that the right to deduct input tax does not affect this analysis. The UT also considered whether, if no such request for allocation was made in respect of a VAT payment, HMRC was nonetheless under an obligation to allocate the payment in the way that was most favourable to the taxpayer in relation to the default surcharge, namely, to current VAT rather than historic liabilities. This is on the basis that the penalties applied under a historic allocation would be disproportionate. The UT concluded it is not disproportionate for a penalty to arise from the manner in which HMRC chooses to allocate a payment, in circumstances where the taxpayer could have but failed to make a request for a different allocation at or before the time of payment. The UT has remitted the case back to the FTT to make findings in respect of (a) the amounts and dates of relevant VAT payments and (b) the allocations made by the appellants in respect of those payments, in order to enable the Tribunal to

7 determine the extent to which allocations were requested and therefore whether and to what extent the default surcharges in dispute should be reduced or removed. Comment: The UT's decision will provide some comfort to businesses finding themselves in default for historic periods who are concerned regarding the possibility of incurring escalating penalties. It does however confirm the importance of clearly requesting, when making payments, that the payments are allocated to current periods rather than historic debts. Businesses which have been subject to protracted periods of default may wish to revisit the position with a view to considering whether appropriate requests for allocation of payments were made. A similar issue (amongst others) arose in the recent successful appeal before the FTT in TC05672 Moc (Scotland) Ltd where the First-tier Tribunal suggested that HMRC should have brought this very point to the taxpayer's attention. First-tier Tribunal Zero rating can apply to supplies of construction services for a residential property supplied prior to the discharge of a planning condition preventing its separate disposal when that condition was removed after commencement, but before completion, of the construction works. TC05694 Quitie Limited The First-tier Tribunal (FTT) has released its decision in this appeal concerning the supply of a residential property (property) and whether zero rating could apply to supplies of construction services supplied prior to the discharge of a planning condition preventing its separate disposal when that condition was removed after commencement, but before completion, of the construction works. Quitie Limited (QL) constructed the property on the site of a hotel operated by QL. It was anticipated that QL would transfer the property to a director of the company. Planning permission was granted but included a clause ( the Section 75 condition ) by which QL could not dispose of the property separately to the buildings forming the hotel. As such, the property failed to meet the conditions of a dwelling as defined in Note 2 of Group 5, Schedule 8, VATA and therefore did not meet the conditions for zero rating. After the construction work had started, but before completion, QL made an application to the Local Authority, which was accepted, to discharge the section 75 condition. Part way through construction, QL issued an invoice plus VAT to the director, representing the total costs incurred by QL to date on the construction of the property. Following the discharge of the section 75 condition, QL issued a credit note to the director for the VAT charged on the basis that the property now met the conditions of a dwelling and the supply should therefore be zero rated. The VAT repayment was denied by HMRC, who argued that zero rating could not apply to supplies before the date on which the section 75 condition was discharged. The document from the Local Authority notifying the discharge of the section 75 condition did not appear to be backdated to the date of the original planning application. The FTT agreed with QL that all four conditions in Note (2) must be satisfied at the same time given the language used in the Note. The FTT considered that a dwelling does not exist until building works have been completed. Therefore, it can only be determined whether the conditions in Note 2 are satisfied at this point. In practical terms, this means when the building is completed and the Local Authority is satisfied that the conditions of the consent have been met. When the property was completed, it satisfied the conditions of Note 2, on this basis, the FTT allowed the appeal. EY Global Tax Alerts Switzerland The current Swiss VAT rates of 8% (standard rate), 2.5% (reduced rate) and 3.8% (special rate) are set to expire on 31 December These rates were temporarily raised in 2011 from the previous VAT rates to finance the Old Age and Survivors Insurance. The Swiss Parliament is now set to debate a possible extension (or unlimited/permanent change) of the raise during its spring session (27 February through 17 March 2017). A popular vote on this topic is expected during September If Swiss voters do not approve the extension of the 2011 rate raise, VAT rates would return to the 2010 rates.

8 GCC On 30 January 2017, the Shura Council in Saudi Arabia announced the approval of the Gulf Cooperation Council (GCC) VAT Framework Agreement. Officials at the Saudi Arabian Ministry of Finance have indicated that the VAT regime will be applicable from 1 January On 1 February 2017, Bahrain's Minister of Finance H.E. Shaikh Ahmed bin Mohamed Al Khalifa signed the unified GCC VAT Framework Agreement and reaffirmed the expectation that VAT will take effect from 1 January 2018, after completion of the due constitutional and legal process. On 12 February 2017, Younis Al-Khouri, Undersecretary at the United Arab Emirates (UAE) Ministry of Finance reaffirmed that the GCC governments were planning early simultaneous adoption of VAT with 1 January 2018 as the anticipated effective date. These official affirmations are in line with similar pronouncements made by government officials from other GCC Member States. The text of the GCC VAT Framework is expected to be made available shortly and is already being shared by some countries with business leaders in strategic economic sectors. Based on the above developments, businesses should expect that VAT in the GCC region will be a reality from 1 January This means that businesses have only 10 months to prepare for VAT implementation and also ensure compliance with VAT laws in each GCC country in which they operate. Australia In Australia, the Goods and Services Tax (GST) treatment of the importation of low value goods valued at less than AU$1,000 (LVG) has been an issue for many years. Australian retailers have maintained that they face an uneven playing field with their sales to Australian customers being subject to GST, while those of their foreign competitors generally are not. The Australian Government committed to eliminating this discrepancy. In a move that will be welcomed by most Australian retailers, but likely very few off-shore sellers and even fewer Australian consumers, the Government has introduced a Bill into the Australian Parliament intended to impose GST on such LVG sales from 1 July Netherlands On 14 February 2017, the Dutch State Secretary of Finance published changes to the existing Dutch insurance premium tax decree (IPT decree). The revised IPT decree contains a number of new topics, amendments to the existing guidance as well as additional guidance on existing topics. India The Union Budget 2017 (the Budget) was announced by the Indian Government last month against a backdrop of a dynamic, political and economic environment. The Budget announcements reinforce the Indian Government's commitment towards promotion of Digital India. With the Digital Economy being one of the 10 themes driving the Budget, the Government announced several reforms which are expected to stimulate the Indian e-commerce and technology space. With regard to GST, the Government has assured substantial progress on various aspects i.e., finalisation of the GST draft law, IT systems to enable GST compliance, and reinforcement of its commitment to the date of 1 July Italy The Italian Parliament has approved amendments to VAT compliance obligations for The amendments will come into force the day after publication in the Official Gazette. Intrastat declarations for acquisitions must continue to be filed for the 2017 fiscal year. The obligation to file these reports ceases with effect from fiscal year For fiscal year 2017, the report of purchase and sales invoices must be filed; for January to June by 16 September 2017 and for July to December by the end of February For fiscal year 2018, the reports must be filed quarterly. Office of Tax Simplification Interim paper on the review of VAT At the 2016 Autumn Statement, the Chancellor of the Exchequer and the Financial Secretary to the Treasury asked the Office of Tax Simplification (OTS) to conduct a review of VAT to see whether the system is working appropriately in today's economy and to identify simplification opportunities.

9 On 28 February 2017, the OTS published an interim report following the first stage of its review which focuses on a number of areas of complexity that the OTS has identified in relation to the current VAT system and poses questions to be addressed during the next phase of work. The areas of focus are: Identifying the implications of a high registration threshold. The UK VAT registration threshold, at 83,000, is much higher than most other countries' (generally closer to 20,000 across all countries with a VAT system or equivalent). This influences and distorts business behaviour. Would it be less distortive if the UK's threshold were lowered to bring in more businesses? If so, how would those small businesses cope? What would be the impact of raising the limit to remove more businesses from VAT? Or could the cliff edge of registration be managed better? Multiple rates, causes of complexity. The UK currently has in effect four different VAT rates: the standard 20% rate, the 5% reduced rate, a zero-rating, and exempt goods and services. The definitions and practical application of definitions of items within each rate cause a lot of complexity. How might this be simplified? Partial exemption, option to tax and capital goods scheme. These have been raised as some of the most complicated areas of VAT. Many more businesses now seem to be affected. Can they be simplified? Or are there ways to amend them to reduce their range and impact? Special Accounting Schemes. There are several schemes, including the flat rate scheme, retail schemes, tour operator's margin scheme and annual accounting scheme, generally designed to simplify the VAT regime. Business practices and technology have changed significantly since they were designed, so are these schemes working appropriately today? Do they need improving or are any in fact no longer needed? VAT admin, penalty and appeals processes. Many have reported complications ranging from unclear guidance to opaque penalty regimes and resource-consuming appeals processes. The OTS has begun identifying specific complexities in the VAT machine and are open to any suggestions on how this might be simplified, increasing certainty for businesses. Formal ruling system. It has been suggested that uncertainties around VAT treatment can delay or prevent many business decisions, especially when bringing a new product to market. A rulings system sounds a possible route but how would it work? Would it provide enough simplification to justify its introduction, given the demands it would place on HMRC? VAT and Making Tax Digital (MTD). HMRC's MTD plans encompass VAT so that brings opportunities and risks. Which areas of the VAT regime need to be simplified to better fit into MTD? What simplification could MTD bring to the VAT regime? How would the special accounting schemes be affected? Further areas for investigation. The OTS has also identified some further issues including sector specific considerations. What other complexities are out there that need to be addressed? The OTS has requested the submission of ideas and comments by 30 June 2017 which should be sent to mailto:ots@ots.gsi.gov.uk?subject=review of VAT. The submissions should provide evidence of how these areas have caused difficulties and complexities (quantified if possible), ideas of how to improve matters and the identification of any areas for simplification that may have been missed. Recommendations for simplification will be further developed during phase 2 of the review with a final report planned for the autumn. European Commission Consultation on the functioning of the administrative cooperation and fight against fraud in the field of VAT This consultation runs from 2 March 2017 to 31 May 2017 and follows the Action Plan on VAT adopted by the Commission on 7 April The Commission aims to update the rules governing the administrative cooperation and the fight against cross border VAT fraud with a view to improve the functioning of the single market and tackling the heavy losses to the Member States and EU revenues. This administrative cooperation assistance is currently governed by Council Regulation (EU) No 904/2010 of 7 October The purpose of this consultation is: to gather views from stakeholders about their experience of the current rules governing administrative cooperation and the fight against cross-border fraud in the field of VAT;

10 to bring new insights for the on-going evaluation of Regulation (EU) 904/2010; to provide information about possible improvements including VIES on-the-web ; to collect quantitative data on possible reduction or increase of regulatory costs/benefits (administrative burden and/or compliance costs) for businesses (in particular SMEs). This open public consultation seeks the views of business, the public and representatives organisations and respondents are offered an online questionnaire via a link within the consultation document. OECD Fourth meeting of the OECD Global Forum on VAT The fourth meeting of the OECD Global Forum on VAT will take place in Paris on 12 to 14 April It will focus in particular on the policy and operational challenges faced by tax authorities in the era of digital globalisation, and on the efficient and the effective implementation of the standards and mechanisms for addressing these challenges recommended by the International VAT/GST Guidelines. This will include discussions on the collection of VAT/GST on online sales by offshore vendors; the role of digital platforms in the collection of VAT/GST on online sales and the use of technology to support the effectiveness of VAT/GST collection. EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transactions and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In doing so, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP Ernst & Young LLP Published in the UK. All Rights Reserved. The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC and is a member of Ernst & Young Global Limited. Ernst & Young LLP, 1 More London Place, London, SE1 2AF. Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material. ey.com/uk Important commercial notice: This may constitute an advertisement or solicitation under US law, if its primary purpose is to advertise or promote Ernst & Young LLP s products or services. Our principal postal address is 1 More London Place, London SE1 2AF. Please click here to remove this from the subscription for this communication. Use the link below to opt-out if you would prefer not to receive any advertising or promotional from Ernst & Young LLP (except for EY Online and the ey.com website, which track preference through a separate process). Your address will be immediately removed from our central mailing list for newsletters and alerts, and all s from Ernst & Young LLP designated as advertising or promotional will be automatically blocked as soon as necessary. Click here to remove yourself from all Ernst & Young LLP commercial s.