Tax News Daily
The latest tax news from around the world, summarised and tagged for tax professionals. Updated twice daily.
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Kerala HC Affirms ITC Benefit for Taxpayers Filing GST Returns Within Section 16(5) Deadline
The Kerala High Court has upheld the right of taxpayers to claim Input Tax Credit (ITC) when GST returns are filed within the deadline prescribed under Section 16(5) of the GST Act. The ruling affirms that compliance with the statutory filing timeline is sufficient to secure ITC entitlement, providing clarity and relief to taxpayers who met the Section 16(5) deadline. This decision reinforces procedural fairness in GST administration and has significant implications for businesses seeking to protect their ITC claims against potential denial on technical grounds.
Flashback on ECJ Cases C-62/93 (BP Soupergaz) – Right to deduct cannot be curtailed without Article 27 authorisation
This article revisits the European Court of Justice case C-62/93 (BP Soupergaz), which established that member states cannot curtail the right to deduct input VAT without obtaining prior authorisation under Article 27 of the Sixth VAT Directive. The ruling reinforced the fundamental nature of the deduction right within the EU VAT system, limiting member states' ability to unilaterally introduce derogations. The case remains a key precedent in EU VAT law, affirming that any restriction on input tax recovery must follow a formal derogation procedure approved at the EU level.
Dental Aligners Are Not VAT-Exempt Dental Prostheses, UK Tribunal Confirms
A UK First-tier Tribunal has confirmed that dental aligners do not qualify as VAT-exempt dental prostheses under UK VAT law. The ruling clarifies the distinction between dental prostheses, which benefit from VAT exemption, and dental aligners, which are classified differently and thus subject to standard VAT. The case has significant implications for orthodontic product suppliers and dental practices that may have treated aligners as exempt supplies. The decision underscores the importance of precise product classification in determining VAT treatment within the healthcare and medical devices sector.
Additional VAT Assessment for Private Use of Company Cars Upheld, but Penalty Reduced
A tax authority has upheld an additional VAT assessment relating to the private use of company cars, confirming that such personal use constitutes a taxable supply subject to VAT. However, the associated penalty imposed on the taxpayer was reduced, suggesting partial mitigation of the compliance failure. The case highlights the continuing enforcement focus on company car VAT adjustments, where businesses must account for output VAT on the private use element. It serves as a reminder for employers and fleet operators to properly track and report private vehicle usage for VAT purposes.
Office-to-Hotel Conversion Does Not Create a Newly Manufactured Building for VAT Purposes
A ruling clarifies that converting an office building into a hotel does not constitute the creation of a newly manufactured building for VAT purposes. This distinction is significant because VAT treatment differs between new constructions and converted properties, affecting whether the sale or lease of the converted building qualifies as a taxable supply or falls under VAT exemptions. The case highlights the importance of understanding construction and conversion definitions under VAT law, particularly for real estate developers and investors undertaking repurposing projects who must carefully assess their VAT obligations and recovery positions.
Madras HC: Council Has No Authority to Validate GST Notifications Issued Without Prior Approval
The Madras High Court has ruled that the GST Council does not have the authority to retrospectively validate notifications that were issued without its prior approval. The judgment challenges the procedural legitimacy of certain GST notifications, asserting that proper Council sanction is a prerequisite before such notifications can have legal force. This ruling has broad implications for the validity of past GST directives issued outside the mandated approval process and could prompt reviews of notifications challenged on similar procedural grounds across India.
Guidance: Joint and several liability — repeated insolvency and non-payment — JAS/FS2
HMRC guidance on joint and several liability notices for repeated insolvency and non-payment (JAS/FS2). This measure allows HMRC to hold directors and other persons connected to companies with a history of tax avoidance, evasion, or phoenixism jointly and severally liable for a company's tax debts. It targets individuals who repeatedly use insolvency to avoid paying tax liabilities, making them personally responsible for outstanding amounts owed to HMRC. The guidance outlines the conditions under which such notices can be issued and the rights of those affected.
Gujarat HC: Delay in Form GST DRC-04 Does Not Justify GST Refund on Voluntary Tax Payment
The Gujarat High Court ruled that a delay in issuing Form GST DRC-04 does not entitle a taxpayer to a refund of voluntarily paid GST. The court examined whether procedural delays by tax authorities in acknowledging voluntary payments could be used as grounds to claim a refund. The judgment reinforces that voluntary tax payments made by taxpayers cannot be reclaimed simply due to administrative delays in processing acknowledgment forms, upholding the principle that self-admitted tax liabilities remain binding regardless of procedural lapses on the part of the GST authorities.
UK VAT on Marketplace Sales: HBS Enterprises Ltd v HMRC and the Deemed Supplier Rules Explained
This article examines the UK VAT tribunal case HBS Enterprises Ltd v HMRC, focusing on the deemed supplier rules that apply to online marketplaces. Under UK VAT legislation introduced post-Brexit, marketplaces like Amazon and eBay are treated as the deemed supplier for VAT purposes when facilitating sales by overseas sellers. The case clarifies how HMRC applies these rules, the obligations placed on marketplace operators, and the conditions under which the deemed supplier mechanism is triggered. The ruling has significant implications for both marketplace platforms and third-party sellers operating in the UK e-commerce space.
Comments on T-356/25 (Rapera) – Tax Representatives’ Direct VAT Liability Confirmed; Joint Liability Requires Proportionality
A commentary on case T-356/25 (Rapera) confirms that tax representatives can bear direct VAT liability under certain conditions, while establishing that any joint liability imposed must satisfy proportionality principles. The ruling clarifies the legal exposure of fiscal representatives acting on behalf of foreign businesses in VAT compliance matters. Courts appear to have drawn a distinction between direct liability arising from representative roles and broader joint liability, the latter requiring a balanced assessment of fault and risk. The decision has significant implications for tax representatives and the businesses they serve across EU jurisdictions.
Virgin Atlantic VAT Loyalty Points Appeal Stayed Pending Avios Case
Virgin Atlantic's VAT appeal concerning loyalty points has been stayed pending the outcome of the Avios case, which addresses similar VAT treatment of airline loyalty schemes. The stay reflects the importance of the Avios decision in establishing the correct VAT framework for loyalty point transactions in the UK aviation sector. The outcome will likely determine how VAT is applied to the issuance and redemption of loyalty points, with significant financial implications for airlines operating comparable reward programmes.
Comments on European Court T-184/25: Post-Securitisation Credit Management Is Taxable
The European Court case T-184/25 examines whether post-securitisation credit management services are subject to VAT. The court found that such services are taxable and do not qualify for VAT exemption typically applicable to financial transactions. This ruling has significant implications for financial institutions engaged in securitisation structures, clarifying that ongoing credit management activities performed after securitisation cannot benefit from VAT exemptions on financial services, potentially increasing VAT costs for firms managing securitised loan portfolios across the EU.
VAT Reduced Rate Denied for Lucky Voice Karaoke Rooms
Lucky Voice, a karaoke venue operator, has been denied the VAT reduced rate for its karaoke room services in a UK tax dispute. Authorities determined that the primary supply was room hire rather than a cultural or entertainment service qualifying for reduced VAT treatment. The case highlights the ongoing complexity of VAT classification for mixed hospitality and entertainment offerings, and establishes an important precedent for similar leisure businesses seeking to apply reduced VAT rates to experiential venue services.
Guidance: Joint and several liability — taxation of coronavirus support payments — CJAS/FS1
HMRC guidance on joint and several liability notices relating to the taxation of coronavirus support payments (CJAS/FS1). This covers situations where individuals or directors are made jointly and severally liable for incorrectly claimed COVID-19 support payments such as CJRS (furlough) or SEISS grants. Where a company has received support payments it was not entitled to and subsequently becomes insolvent, HMRC can issue notices to connected persons to recover the overpaid amounts, ensuring tax compliance around pandemic-era government financial support schemes.
Eligible taxpayers to get automatic IRS penalty relief
The IRS is providing automatic penalty relief to eligible taxpayers, sparing them from having to request abatement manually. This relief targets specific penalties, likely failure-to-file or failure-to-pay penalties, and applies to qualifying individuals and entities who meet certain criteria. The automatic nature of the relief reduces administrative burden on taxpayers and tax professionals, as the IRS will apply the abatement without requiring formal applications. This type of relief is typically granted during periods of systemic issues or as part of broader compliance initiatives, and eligible taxpayers should receive notifications confirming the penalty reduction or removal from their accounts.
Eligible taxpayers to get automatic IRS penalty relief
The IRS is providing automatic penalty relief to eligible taxpayers, sparing them from having to file requests or take additional action to receive the benefit. This relief targets specific penalties, likely related to failure-to-pay or estimated tax underpayment penalties, and applies to qualifying individuals and businesses. The automatic nature of the relief reduces administrative burden on taxpayers and tax professionals. This development is significant for US taxpayers who may have faced penalties during recent tax years, offering financial relief without requiring proactive steps from those who qualify under the IRS's criteria.
IRS Circular 230 AI guidance explained
This article explains IRS Circular 230 guidance as it applies to artificial intelligence in tax practice. Circular 230 governs the conduct of tax professionals practicing before the IRS, and the piece examines how these existing rules apply when practitioners use AI tools to provide tax advice or prepare returns. Key considerations include practitioner responsibilities for AI-generated content, accuracy obligations, and ethical duties when relying on automated systems. The guidance clarifies that tax professionals remain accountable for AI outputs, ensuring compliance with competency and due diligence standards even when leveraging emerging technology in their workflows.
EU's Top Court Rules Out Joint VAT Liability In Greek Case
The European Union's Court of Justice has ruled against joint VAT liability in a Greek case, clarifying the limits of member states' ability to hold multiple parties jointly liable for VAT obligations. The ruling has significant implications for how EU countries can structure VAT enforcement mechanisms and joint liability provisions under EU VAT law. Greece, like other member states, must align its national VAT rules with the court's interpretation, potentially requiring legislative or administrative adjustments to existing joint liability frameworks governing VAT collection and compliance.
Borden & Kaur: State Tax Enforcement of Section 1031 Proximate Exchanges
This article examines state tax enforcement issues surrounding Section 1031 like-kind exchange rules, specifically focusing on 'proximate exchanges' — transactions that approximate but may not strictly comply with federal 1031 requirements. The piece by Borden and Kaur analyzes how state tax authorities are scrutinizing these arrangements, the legal standards applied, and the compliance risks taxpayers face at the state level. Section 1031 allows deferral of capital gains on real property exchanges, making state enforcement of its boundaries a significant personal and corporate income tax issue for real estate investors and businesses across multiple U.S. states.
Colo. County's Mill Increases Unconstitutional, Court Told
A Colorado county is facing a legal challenge over mill levy increases alleged to be unconstitutional. The case centers on whether the county followed proper legal procedures when raising property tax mill rates, with challengers arguing the increases violate constitutional constraints on local taxation authority. The dispute highlights ongoing tensions between local government revenue needs and constitutional limitations on property tax rate-setting in Colorado, potentially affecting how counties across the state structure future mill levy adjustments and taxpayer protections.
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