Distance selling

Appealable matter within an HMRC letter to taxpayer

In 2010 Sports Direct asked HMRC whether the VAT distance selling rules would apply to goods sold to customers in other EU member states. HMRC confirmed that because a separate company would deliver the goods UK VAT would apply. As a result Sports Direct accounted for UK VAT on cross-border intra-EU sales to non-VAT registered customers.

In January 2016 HMRC reversed that decision. This was on the basis that it been advised by the EU VAT Committee – an advisory body set up by the European Commission to provide guidance on applying the EU VAT Directive – that the use of a separate company to deliver the goods was irrelevant. Such arrangements breached Art 33 of the VAT Directive. The economic reality was that these would fall within Art 33 so that the place of supply would...