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Business Tax Briefing - 10/02/2017

IFS Green Budget 2017
The Institute for Fiscal Studies (IFS) has launched the IFS Green Budget 2017.  The report looks at the issues and challenges facing the Chancellor as he prepares for his Budget on 8 March. Additional analysis has been provided by the ICAEW and Oxford Economics. The following presentations are available:
       The global economy  -  Andrew Goodwin, Oxford Economics
       The UK economic outlook: public sector liabilities in the Whole of Government Accounts; debt -  Ross Campbell, ICAEW  
       Challenges for the UK public finances - Thomas Pope  
       UK health and social care spending -  George Stoye  
       Working-age incapacity and disability benefits -  Carl Emmerson  
       Tax, legal form and the gig economy - Helen Miller
       Reforms to apprenticeship funding in England - Luke Sibieta.
These can all be accessed at
The full Green Budget 2017 report (312 pages) is available at
Luxembourg's tax treatment of GDF Suez: comments invited
The European Commission opened an in-depth investigation into Luxembourg's tax treatment of the GDF Suez group (since renamed Engie) in September 2016. The Commission has concerns that several tax rulings issued by Luxembourg may have given GDF Suez an unfair advantage over other companies, in breach of EU state aid rules.  See The non-confidential version of the Commission's decision was published in January 2017. See The Commission has now invited interested parties to submit their comments on the matter. The deadline is one month from the date of publication of the letter inviting comments, ie one month from 3 February 2017.  See

Dbriefs webcasts
The next Dbriefs webcast is on Wednesday 15 February at 12.00 noon GMT/13.00 CET. The topic is US Tax Developments And Prospects For Reform and is from our international tax series. Bill Dodwell will be hosting the webcast and during the call our panel of experts will discuss the potential reform of the US tax code following the recent governmental changes and how these may impact your organisation. To register for the webcast, click here.

Spring Budget 2017 survey
With Philip Hammond’s first and last Spring Budget less than a month away we are keen to hear your views on the key matters that will impact you, your business and your industry and would welcome your participation in a short 10-question survey.  Results will be shared on
Click here to take part in the survey.
Deloitte treats survey responses as being made in the strictest confidence. The results of the survey will solely consist of aggregated data and respondents will not be identified on an individual basis

EU: Maltese Presidency publishes work programme
Malta, which took over the EU presidency on 1 January 2017, has now published its work programme. During the next six months, the presidency will focus on six key areas: migration, single market, security, social inclusion, Europe's neighbourhood and the maritime sector.’ Continuing work is promised on the amendments to the Anti-Tax Avoidance Directive to ensure hybrids are properly covered. There will also be initiatives on the dispute resolution mechanism, on the re-launch of the Common Consolidated Corporate Tax Base, on the e-commerce proposals and on the reduced rates on e-publications proposals.  On company law, the Presidency will ‘build on the work carried out by the Netherlands and Slovak Presidencies continuing the work on the Country By Country Reporting dossier’. See
Criminal Finances Bill
The Criminal Finances Bill inter alia creates offences for cases where a person associated with a company or partnership facilitates the commission by another person of a tax evasion offence, and contains measures to create new offences of failure to prevent facilitation of tax evasion. Amendments tabled to date include New Clause 6 on public registers of beneficial ownership of companies registered in the Overseas Territories, which has cross-party support. See A new fact sheet on the Bill deals with Company Ownership Transparency in the Overseas Territories (OTs) and Crown Dependencies (CDs). In the run-up to the London Anti-Corruption Summit in 2016, the OTs and CDs signed agreements with the UK to establish central registers of beneficial ownership information and to provide UK law enforcement a with near real-time access to this information.  All the OTs and CDs with a financial centre have also signed up to the new OECD initiative for development of a standard for systematic exchange of beneficial ownership information. These commitments should come into effect by June 2017. The fact sheet states that the UK‘s practice has been only to exercise its powers to legislate for the OTs as a matter of last resort and on matters that relate to areas for which UK retains responsibility, such as human rights compliance. See The Bill will have its remaining stages in the Commons on 21 February.

VAT: student recruitment services supplied to universities
An increasing number of students at UK universities now come from outside the EU. To attract such students, Newcastle University engaged local agents (e.g. in Malaysia) to handle non-EU student recruitment. The First-tier Tribunal has now ruled that the agents’ services were made to the University, and not (in part) to the student. The University should therefore account for VAT on the full value of services received since 2010 under the reverse charge (although before 2010 different rules on place of supply applied). Moreover, the University was not entitled to any VAT recovery on the services (even as residual input tax). Given the increasing internationalisation of universities and the competitiveness of the education market, overseas agents have become a key part of international strategy, although new recruitment models have been increasingly used in recent years. See
To discuss the case, or its implications, please contact Laurie Pay on 0121 695 5296.

VAT: Santogal: evidence required for cross-border car sales: AG Opinion
In many cross-border sales, a supplier has to rely to some extent on evidence provided by their customer, in order to treat the sale as outside the scope of domestic VAT. In Santogal, the CJEU is considering this issue in relation to the sale of a Mercedes costing EUR 447,665 by a company based in Portugal, to an individual claiming to be resident in Spain. Although AG Paolo Mengozzi was critical of specific Portuguese rules in this area, he confirmed that suppliers need to take reasonable care and obtain objective evidence to support a decision not to charge VAT. This might even, he suggests, extend to contacting a customer up to 12 months after the sale. In this case, the fact that the customer provided three different addresses in Spain to the supplier on different documents should perhaps have prompted further scrutiny. The Opinion once again demonstrates how suppliers can be exposed to risk where customers are not sufficiently clear about their intentions. See To discuss the case, or its implications, please contact Martin Tooze on 0121 695 5144.

VAT: ‘points based’ reward scheme appeals refused by First-tier Tribunal
The First-tier Tribunal has dismissed appeals by Marriott Rewards LLC and Whitbread Group Plc in relation to points based reward schemes run by Marriott. When members of the loyalty scheme redeem points in exchange for a ‘free’ stay, the hotel makes a charge to the points company. The First-tier Tribunal agreed with the appellants that, as was the case in the ‘Nectar points’ case of Aimia Coalition Loyalty UK Limited, the redeemers made supplies to the scheme operator (Marriott Rewards LLC in the case). However, it decided that the supplies consisted of the agreement to provide reward stays generally, and that the refunds of VAT claimed by Marriott were not payable as the relevant supplies were outside the scope of UK VAT, while the refunds of output tax charged by Whitbread (in connection with supplied made before January 2010) were not due because the supplies made at that time were correctly chargeable with UK VAT. Accordingly, both appeals were dismissed. However, the decision indicates that VAT recovery may be possible in relation to many ‘points based’ reward schemes. See For further information, or to discuss the implications of the case, please contact Daniel Barlow on 020 7007 6772

This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.

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