Our previous post about this case can be found HERE
On 28 December 1977, the United Kingdom notified special VAT measures that permits commodity futures to be traded on certain markets in the United Kingdom free of VAT and of the recording requirements of VAT subject to certain conditions. This regulation was then amended several times to add to its scope a number of commodities markets that were not listed in the original notification. The Commission claims that the amendments enlarge the scope of the original derogation that the United Kingdom had notified in 1977. They should consequently have been notified to the Commission pursuant to Article 395 (1) of the VAT Directive but they were not.
Today, Curia released the ECJ judgement about this case.
It follows that the contested amendments consist of substantial amendments and, therefore, constitute new ‘special measures for derogation’ within the meaning of Article 27(1) to (4) of the Sixth Tax Directive (now Article 395(1) to (4) of Directive 2006/112), which means that the Commission should have been given notification of those amendments for authorisation by the Council in accordance with Article 27(2) of the Sixth Directive (now Article 395(2) of Directive 2006/112).
As such, the Court declares that by introducing new simplification measures that extend the zero-rating and the exception to the normal requirement to keep value added tax records which were provided for in the Value Added Tax (Terminal Markets) Order 1973, as amended by the Value Added Tax (Terminal Markets) (Amendment) Order 1975, without submitting an application to the European Commission with a view to seeking the authorisation of the Council of the European Union, the United Kingdom of Great Britain and Northern Ireland has failed to fulfil its obligations under Article 395(2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.
- Grant Thornton
- HMRC (no immediate change to the VAT treatment of contracts traded under the TMO)