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Deeks VAT Newsletter issue 59: The Latest to Keep You (and Your Clients) Compliant and Clever 

Welcome to this Issue of Deeks VAT Newsletter    

May 2025 issue 59

Keeping you up to date on VAT changes       

In this month’s newsletter we cover the following: 

Generic Maths Ltd v HMRC [2025] UKFTT 460 (TC) – FTT Dismissed Appeal   

Align Technology Switzerland GMBH & Anor [2025] UKFTT 462 (TC) – FTT Upheld Decision 

Hannaford PPE Limited & Anor [2025] UKFTT 459 (TC) – FTT allowed late appeal     

Bolt Services UK Limited 

Global by Nature Limited 

Hastings Insurance Services Limited 

Sonder Europe Limited   

Yorkshire Agricultural Society 

VAT Refunds for Non-UK Businesses: Your Essential Guide   

Managing Your Business While Awaiting Your VAT Number   

Latest from the Courts 

Generic Maths Ltd v HMRC [2025] UKFTT 460 (TC) – FTT Dismissed Appeal 

GM’s appeal centred on its ‘ConquerMaths’ product, which it claimed was primarily a tool for assessing pupils’ mathematical ability and identifying gaps in their knowledge.  

GM argued that the product qualified as an exempt supply under the VAT Act, specifically as an ‘examination service’ under Item 3 of Group 6, Schedule 9 VATA. HMRC disagreed, asserting that the product functioned as an online maths tutorial rather than an examination service, and should therefore be standard rated. Although the Tribunal acknowledged that the product included diagnostic tests, it concluded that it did not fall within the scope of exempt examination services. 

The Tribunal also held that HMRC’s VAT assessment had been made using best judgment, and the appeal was therefore dismissed. 

Align Technology Switzerland GMBH & Anor [2025] UKFTT 462 (TC) – FTT Upheld Decision 

The FTT considered the meaning of “prosthesis” and concluded that, beyond referring to a replacement body part, the term also encompassed devices that enhance the function of a body part without replacing it. On that basis, the aligners qualified. The tribunal further held that this interpretation aligned with the purpose of the exemption, and that the views of the EU VAT Committee—relied upon by HMRC—were not binding on it. 

Hannaford PPE Limited & Anor [2025] UKFTT 459 (TC) – FTT allowed late appeal 

The Appellants contended that the delay arose due to HMRC’s decision letter not arriving and HMRC then taking time to issue a replacement. HMRC, on the other hand, maintained that the missing letter was irrelevant, as the Appellants already had enough information to lodge an appeal. 

Upon review, the FTT concluded: 

“Based on the particular circumstances of this case and my assessment of the evidence and arguments presented, I find that while the delay was considerable, the Appellants acted reasonably promptly in seeking information they reasonably required to understand the penalties and consider their appeal rights. A substantial part of the delay was due to HMRC’s failure to respond to at least two requests from the Appellant. Given the high level of the penalties and the significant financial impact on the Appellants, denying them the opportunity to appeal in these circumstances would be inconsistent with the Tribunal’s overriding objective. 

Accordingly, permission to make a late appeal is granted.” 

HMRC Updates – Spring 2025

VAT APPEALS

Key Cases and their current status 

1. Bolt Services UK Limited 

Status: HMRC Seeking Permission to Appeal to Court of Appeal 

HMRC is currently seeking permission to appeal to the Court of Appeal in the significant Bolt Services UK Limited case, which centres on the VAT treatment of mobile ride-hailing services. The dispute primarily focuses on the applicability of the Tour Operators Margin Scheme (TOMS), where both the First-tier Tribunal and Upper Tribunal ruled in Bolt’s favour. The tribunals determined that Bolt’s services were comparable to those offered by travel agents, despite their non-traditional nature, and consequently ruled that VAT should be calculated on the margin rather than the total payment. This landmark decision upholds TOMS applicability for ride-hailing services, potentially setting a precedent for similar digital service providers in the transport sector. Read our full analysis of the case here. 

2. Global by Nature Limited 

Status: HMRC Seeking Permission to Appeal to Upper Tribunal 

HMRC is seeking permission to appeal to the Upper Tribunal in the Global by Nature Limited case, which focuses on the VAT treatment of powdered supplements marketed as ‘sports drinks’. The First-tier Tribunal (FTT) ruled that these products should be zero-rated under Group 1, Schedule 8, VATA94, rejecting HMRC’s assertion that they should be standard-rated as sports drinks under excepted Item 4A. The FTT applied a two-stage test, determining that products only fall within the Item 4A exception if they are both a sports drink and either advertised in a specific way or similar to other marketed sports drinks. Crucially, the tribunal found that these products’ low sugar content disqualified them from being classified as sports drinks, which typically contain significant carbohydrates. Even under an alternative interpretation, the FTT maintained that two of the three products in question should still be zero-rated. 

3. Hastings Insurance Services Limited 

Status: HMRC Not Appealing 

HMRC has decided not to appeal the Hastings Insurance Services Limited case, which addressed the crucial issue of input tax deductibility for services provided to a Gibraltar insurer. The First-tier Tribunal (FTT) ruled in favour of Hastings Insurance Services Limited (HIS), supporting their interpretation that the term “customer” refers to the Gibraltar insurer (Advantage Insurance Company Limited) rather than the end insureds. This interpretation allows HIS to recover input tax that would otherwise be irrecoverable if the services were provided to a UK insurer. The decision opens potential opportunities for taxpayers to submit claims for under-recovered VAT, particularly for periods before January 1, 2024, when businesses could rely on the ‘direct effect’ of EU law. However, the position becomes more complex for periods after this date, requiring careful consideration of the new regulatory landscape. 

4. Sonder Europe Limited 

Status: Sonder Granted Permission to Appeal to Court of Appeal 

Sonder Europe Limited has been granted permission to appeal to the Court of Appeal in a case centring on the applicability of the Tour Operators Margin Scheme (TOMS) for accommodation services. The Upper Tribunal (UT) overturned the First-tier Tribunal’s decision, ruling that Sonder’s supplies were materially altered from the original leases, making them in-house supplies and therefore outside the scope of TOMS. The UT emphasised the requirement that bought-in supplies must be for the direct benefit of travellers, a crucial factor in their decision to allow HMRC’s appeal and dismiss Sonder’s appeal against the assessments. This significant ruling has substantial implications for the serviced accommodation sector. Read our detailed analysis of the case here. 

5. Yorkshire Agricultural Society 

Status: HMRC Not Appealing 

This case scrutinised whether admission fees to the 2016 and 2017 Great Yorkshire Show qualified for VAT exemption as fundraising events organised by a charity. 

Key Details: 

• Tribunal Decision: The First-tier Tribunal ruled in favour of the Yorkshire Agricultural Society, determining that the admission fees met the criteria for VAT exemption under the Value Added Tax Act 1994, Schedule 9, Group 12, Item 1. 

• HMRC’s Appeal: HMRC appealed this decision to the Upper Tribunal, arguing that the primary purpose of the event was educational rather than fundraising, and thus should not be exempt. 

• Upper Tribunal Outcome: On 9 January 2025, the Upper Tribunal dismissed HMRC’s appeal, upholding the original decision that the event’s admission fees were exempt from VAT, because the event’s primary purpose was fundraising and that it was promoted as such, satisfying the necessary conditions for exemption. 

Implications: 

This case underscores the importance of clearly demonstrating the primary purpose of charitable events to qualify for VAT exemptions. It also highlights the necessity for charities to meticulously document and promote their events as fundraising activities to meet exemption criteria. 

Additional Update 

Late Payment Interest Changes 

• Effective from: 1 January 2023 

• Applies to: VAT-registered businesses 

• Interest charged: From day one of overdue payment 

• Duration: Until full payment received 

• Note: Updated guidance available on objection procedures 

VAT Articles 

VAT Refunds for Non-UK Businesses: Your Essential Guide 

Overseas businesses not established in the UK can reclaim VAT on certain purchases through HMRC’s refund scheme, provided they meet specific eligibility criteria. To qualify, businesses must not require UK VAT registration, have no physical presence in the UK, and be based in a country offering reciprocal VAT refund arrangements. 

The scheme covers various business expenses, including travel costs, accommodation, meals, and trade fair expenses. However, certain items are excluded, such as mixed-use purchases, business entertainment, and goods for resale. Claims must meet minimum thresholds (£130 for periods of at least three months, or £16 for annual claims) and be submitted by 31 December following the VAT year ending 30 June. 

HMRC typically processes refunds within six months, with payments available via bank transfer, cheque, or SWIFT transfer in pounds sterling. The process requires specific documentation, including a certificate of status (VAT66A form) and valid VAT invoices. 

Read our comprehensive guide to UK VAT refunds for non-UK businesses 

Managing Your Business While Awaiting Your VAT Number 

With HMRC’s current delays in processing VAT registrations, it’s crucial to understand how to operate your business during the waiting period. The key principle is that your business is considered VAT registered from your chosen Effective Date of Registration (EDR), regardless of when HMRC issues your VAT number. 

During this interim period, whilst you cannot display VAT on invoices without a VAT number, you should charge customers the gross amount (including VAT). For example, if your net price is £100, charge £120 inclusive of VAT. Include a statement on invoices explaining that you’re awaiting your VAT registration number. Once received, you’ll need to re-issue proper VAT invoices to your customers. 

This approach ensures proper cash flow management and compliance with VAT regulations. While an alternative method of issuing VAT-only invoices later exists, we recommend the gross amount approach to avoid potential payment issues, particularly with consumer customers. 

Read our detailed guide on managing VAT registration delays 

For any VAT or TAX Enquiries contact:   

Jane Deeks, Managing Director   

 jane@deeksvat.co.uk   

 07710553831