Boehringer Ingelheim Ltd – voluntary price control schemes reduced consideration and taxable amount of supplies

Boehringer Ingelheim Ltd – HMRC granted permission to appeal to the UT – Whether payments made to the DHSC under voluntary price control schemes reduced consideration and taxable amount of supplies

• HMRC Appeal Granted: The UK tax authority (HMRC) has been granted permission to appeal to the Upper Tribunal (UT) in the case involving Boehringer Ingelheim Ltd (BIL), which questions whether payments made to the Department of Health and Social Care (DHSC) under voluntary price control schemes should reduce the taxable amount of supplies and if overpaid VAT constitutes unjust enrichment.
• Payments Characterization and Tax Implications: BIL made payments to the DHSC between 2014 and 2020, viewing them as discounts on their supplies of health service medicines to the NHS. HMRC rejected BIL’s claim for £21 million, citing that the DHSC was not the final consumer and that there was insufficient linkage between the payments and the supplied medicines.
• Previous Tribunal Ruling and Key Concerns: The First-tier Tribunal (FTT) previously ruled that the payments did indeed reduce the value of BIL’s supplies and that unjust enrichment did not apply. The current appeal raises significant questions about the validity of existing regulations and the principle of fiscal neutrality, referencing various ECJ case law that could impact the outcome.

Source KPMG

See also: Roadtrip through ECJ cases: Focus on Promotional activities/Discounts (Art. 79, 87, 90(1)) – VATupdate

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