FFW VAT case goes to the European Court of Justice | Fieldfisher
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FFW VAT case goes to the European Court of Justice

Nick Beecham
17/05/2012
A hearing date - 20 June 2012 - has been fixed for our VAT case (Field Fisher Waterhouse LLP Case C-392/11) before the Sixth Chamber of the Court of Justice of the European Union. This is the case in A hearing date - 20 June 2012 - has been fixed for our VAT case (Field Fisher Waterhouse LLP Case C-392/11) before the Sixth Chamber of the Court of Justice of the European Union. This is the case in which we are challenging HMRC's guidance on the VAT treatment of service charges. HMRC's guidance is set out in Notice 742 and (broadly) asserts that the VAT treatment of service charges follows the VAT treatment of the rent. Where a landlord has not exercised its option to tax, this results in the service charge being consideration for an exempt supply by the landlord so that the landlord is unable to recover VAT on its costs of servicing the building. This cost is passed on to the tenant which cannot recover the VAT, even if it has a fully-recoverable VAT status. We are arguing that the landlord makes a supply of servicing the building which is separate from its letting supply. If we are successful, this will enable a landlord to issue VAT invoices for the service charge to its tenant even where it has not opted to tax, allowing VAT to flow through to the tenant and recovered.