EU VAT Law and principles to be retained

The Taxation (Cross-border Trade) Bill has been before Parliament for some time. This includes some VAT provisions. S42 is headed “EU Law relating to VAT.” This contains general provisions that direct EU legislation will cease to have effect post-Brexit from a date to be determined.

Of course, VAT will remain in force in the UK.

However, s42(4) provides that the principles of EU VAT law preventing abuse of the VAT system will continue to apply. This refers to Halifax, which was the case that coined the phrase ‘abuse of rights.’ This means that HMRC can continue to mine EU principles when they wish to challenge taxpayers’ VAT planning arrangements.

The other case which is named is Kittel, which was the key early MTIC case.

You can check out the bill and its progress here: https://services.parliament.uk/Bills/2017-19/taxationcrossbordertrade/documents.html