In the world of VAT, 2025 could be a significant year with several cases soon to take place at the Upper Tribunal, Court of Appeal and Supreme Court. We can expect to hear some momentous decisions in the coming months.
The highlighted cases could affect the VAT liability of numerous sectors including travel, charities, and food.
If any of the cases affect your business, there may be an opportunity to reduce your VAT liability and if applicable, also submit a VAT repayment claim to HMRC which could be stood behind the relevant court decision.
Bolt Services UK Ltd
In a decision published on 15 December 2023, the First Tier Tribunal determined Bolt Services UK Limited should pay its VAT using the Tour Operators’ Margin Scheme (TOMS). This means that Bolt would pay VAT on the margin between the fare paid by the passenger and the amount retained by the driver.
HMRC were granted permission to appeal to the Upper Tribunal and the appeal was held on 26 to 28 November 2024.
You can read further about this case on previous articles published by MHA.
We are currently waiting for what could be a significant decision to be published.
Sonder Europe Ltd
A second appeal relating to the use of TOMS looks at whether apartments leased from a landlord which are then used to provide short term accommodation to travellers is a supply within TOMS.
Sonder Europe Limited was successful at the First Tier Tribunal and the decision concluded Sonder Europe Limited should declare VAT on the gross margin it retains.
HMRC were granted permission to appeal to the Upper Tribunal and the hearing was held in the week commencing 2 December 2024. We are currently waiting for the publication of the decision.
You can read further about this case in our previous insight.
Yorkshire Agricultural Society
Yorkshire Agricultural Society was successful at the First Tier Tribunal, and it was concluded the income it received from the admission charges to the 2016 and 2017 Great Yorkshire Show was a fundraising activity and not liable to VAT.
HMRC appealed to the Upper Tribunal, the decision relating to the hearing on 9 October 2024 was released on 9 January 2025. The Tribunal agreed with the First Tier Tribunal and dismissed HMRCs appeal.
Innovative Bites Ltd
The First Tier Tribunal and Upper Tribunal looked at whether giant marshmallows are confectionery and therefore do not meet the criteria for zero rating.
Innovative Bites Limited was successful in 2023 at the First Tier Tribunal and in 2024 at the Upper Tribunal. Both decisions concluded “Mega Marshmallows” are not confectionery and therefore have a zero-rated VAT liability.
HMRC have been granted permission to appeal to the Court of Appeal. This appeal is scheduled to be heard on either 11 or 12 March 2025.
VAT
Read more about VATRead moreHMRC appealed to the Upper Tribunal, the decision relating to the hearing on 9 October 2024 was released on 9 January 2025. The Tribunal agreed with the First Tier Tribunal and dismissed HMRCs appeal.
Northumbria Healthcare NHS Foundation Trust
The Trust submitted a claim for over declared output tax relating to car parking charges at its NHS hospital sites. HMRC refused the claim concluding the VAT liability of the car parking charges was standard rated.
The Trust appealed to the First Tier Tribunal and Upper Tribunal and was unsuccessful at both. The Court of Appeal disagreed with the previous decisions and concluded the car parking income the Trust received was not subject to VAT.
HMRC have been granted permission to appeal to the Supreme Court and it is listed for hearing on 7 to 8 April 2025.
There are approximately 50 appeals by other NHS bodies requesting repayment of over declared output tax on car parking charges which will rely on the Supreme Court’s decision.
Hotel La Tour Ltd
This is a significant case regarding input tax recovery on costs relating to the sale of shares if the proceeds received are used to fund taxable supplies of the business.
Hotel La Tour Limited was successful at the First Tier Tribunal and Upper Tribunal. Following HMRC’s appeal, the Court of Appeal concluded Hotel La Tour could not look beyond a ‘direct and immediate link’ of costs relating to the exempt sale of shares and the input tax was not reclaimable.
Hotel La Tour has been granted permission to appeal to the Supreme Court. We are waiting for confirmation of the listing date.
The dates listed are correct as of 8 January 2025 via List of VAT appeals updates - GOV.UK
There are approximately 50 appeals by other NHS bodies requesting repayment of over declared output tax on car parking charges which will rely on the Supreme Court’s decision.
