5 Key VAT Updates: March 2025 Highlights

• Hastings Insurance Service Ruling: The First-tier Tribunal’s decision allows the insurance sector to potentially reclaim under-recovered input tax by invalidating an anti-avoidance provision that restricted VAT recovery for intermediary services, applicable to transactions until the end of 2023.
• Innovative Bites Case Update: The Court of Appeal’s ruling in the Innovative Bites Limited case has narrowed the criteria for zero-rating sweetened food products, making it more challenging to classify borderline items as non-confectionery, leading to increased scrutiny from HMRC.
• Queenscourt Limited’s Legitimate Expectation Argument: Following a prior loss at the First-tier Tribunal regarding takeaway food supplies, the taxpayer has been granted permission to argue that HMRC’s reversal on a previous decision creates a “legitimate expectation,” complicating VAT negotiation strategies.
• VAT in the Digital Age (ViDA) Adoption: The Council of the European Union has adopted the ViDA package, set to roll out progressively until 2035, including significant changes like a single VAT registration by July 2028 and new digital reporting requirements by July 2030, urging businesses to prepare for these upcoming changes.
• Bolt’s Margin Scheme Confirmation: The Upper Tribunal upheld the decision that Bolt’s on-demand private hire service falls under the Tour Operator’s Margin Scheme (TOMS), clarifying that VAT is payable on the profit margin rather than total customer payments, affecting the broader application of TOMS to non-traditional operators.

Source Forvis Mazars

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