A recent tribunal case has opened the possibility for VAT rebate claims for healthcare providers. For many years, HMRC have ignored the item in the VAT Act which exempts the provision of a deputy for a medical practitioner, saying that it is not what the law was meant to say. Notwithstanding that, the Isle of Wight NHS Trust have won a tribunal case on the basis that the wording of that specific item is very clear, even if it is at odds other parts of the legislation. It is to be anticipated that legislation will be amended so that supplies will be taxable going forward.

Healthcare providers should be engaging with their recruitment suppliers to consider whether protective claims are appropriate for past supplies.

The Court of Appeal has ruled against Hippodrome Casino Limited (HCL), rejecting the attempt to deduct residual input tax relating to free food, drinks and free £5 chips given to customers who were gambling at the Casino. Hippodrome was unsuccessful in demonstrating that the floorspace-based Standard Method Override (SMO) provided a more accurate reflection of economic use, compared to the standard method, which remains the default for VAT apportionment.

The Court of Appeal upheld the Upper Tribunal’s decision to reject the floorspace method, stating that the taxpayer didn’t sufficiently address HMRC’s argument (dual economic use of areas supporting both taxable and exempt supplies) and the Judge stated that she was ‘not persuaded that HCL’s floorspace approach was correct’.

The taxpayer was a wholesale supplier of hotel accommodation. The transactions featured instant payment for rooms, via a virtual credit card. As payment was not dependent on the production of invoices, the taxpayer experienced issues with obtaining invoices from hotels supplying rooms. The taxpayer was not in receipt of VAT invoices and unable to claim for input tax recovery. The input tax at stake was over £10m.

The Court reviewed HMRC’s alternative evidence policy and found inconsistencies within the documents and concluded that they did not properly address cases where there was no invoice, rather only focusing on when the invoice was not valid in form.

The judicial review claim was upheld and HMRC were ordered to use its discretion in authorising input tax recovery in these circumstances.

It was recently announced that the Government is suspending preferential rates of customs duty on certain imports under the DCTS.  This will affect countries in the Standard Preferences tier of the DCTS, which is currently India and Indonesia and will be effective from 1 January 2026 until 31 December 2028.

This will be relevant to businesses that are based in the UK and import goods from a DCTS standard preference beneficiary country, or are based in a DCTS standard preference beneficiary country and export goods to the UK.

From 1 January 2026, UK businesses exporting goods into the EU under DDP (Delivered Duty Paid) terms via France, will face changes that will impact VAT reporting.

The use of a limited fiscal representative will be abolished from 1 January 2026 for non-EU companies, meaning UK businesses will no longer be permitted to use French fiscal representatives under Regime 42. To continue importing goods through France, for onward supply to the EU under DDP terms, UK businesses must register for VAT in France and file French VAT returns.

A gamer has managed to turn gold, being a currency designed for an online computer game, outside the game, by purchasing it from players and reselling it to other players. The Lithuanian tax authorities assessed the gamer for the VAT.

So is this ‘gold trading’, the purchase and sale of electronic services and therefore an exempt currency transaction, or a transaction in respect of in-game gold, being a second-hand margin scheme sale, or a multi-purpose voucher?

The AG has concluded that in-game gold was not deemed to be a voucher, however, did not conclude on whether the transactions would fall within the exemption, nor whether they could be second-hand supplies and referred it back to the commission. Watch this space.

The Supreme Court explored the interaction between VAT group rules and timing of taxable supplies.

The Court held that section 43 of the VAT Act, does not disregard all payments for continuous services simply because they were earned while both parties were in the same VAT group. If the time of supply falls after the supplier has left the group, VAT can be chargeable.

With regards to the time of supply rules, the Court held that invoicing/payment after exit can trigger a VAT charge, even if the work was done earlier when still in the group.

This decision has significant implications for those operating within VAT groups, specifically businesses in relation to deferred consideration and success fees.

A VAT registered business qualifies as an end user, or intermediary, when it buys building and construction services that fall within the scope of CIS and the domestic reverse charge (DRC) and does not make onward supplies of those services. VAT is applied as normal on the supply after an end user, or intermediary, notifies its supplier of end user status in writing. Being treated as an end user is optional, the buyer can choose not to provide a written notification and apply the DRC instead.

Care is required to ensure the written notification is provided at the right time. If the written notification is given after the invoice charging VAT is raised by the supplier, the DRC still applies. The VAT charged cannot be claimed, as it will have been charged in error and it would be necessary to ask the supplier to correct. If it is claimed, HMRC could disallow it and apply penalties.

Solicitors and others receiving exempt interest on client funds need to take action to avoid HMRC disallowing VAT on their overhead expenses. Talk to the VAT team if your client is seeing higher interest receipts and has not agreed a partial exemption special method.

As always, if you would like any further information on the topics above, please do not hesitate to contact me or any other member of the VAT team: