18 Value added taxation
| (31821)
12391/10
COM (10) 381
| Draft Directive amending Directive 2008/9/EC laying down detailed rules for the refund of VAT, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State
|
| Legal base | Article 113 TFEU; consultation; unanimity
|
| Document originated | 15 July 2010
|
| Deposited in Parliament | 22 July 2010
|
| Department | HM Treasury
|
| Basis of consideration | EM of 27 July 2010
|
| Previous Committee Report | None
|
| To be discussed in Council | Not known
|
| Committee's assessment | Politically important
|
| Committee's decision | Not cleared, further information requested
|
Background
18.1 Under Council Directive 2008/9/EC, with effect from 1 January
2010, VAT registered taxpayers have until 30 September of the
calendar year following the refund period to submit their VAT
refund claims. This means, for example, that businesses have until
30 September 2010 to submit any VAT refund claims in respect of
the 2009 calendar year. Under the previous paper-based EU VAT
refund system, businesses only had a six-month period to submit
their refund claims, so the new arrangements are relatively generous
and business-friendly. However, although Member States tax authorities
were meant to have their electronic VAT refund portals up and
running from 1 January 2010, a small number did not do so until
mid-May 2010.
18.2 Council Directive 2008/9/EC specifies in some
detail the core common data fields that must be included on each
Member State web-based portal. However, Member States have had
divergent views about the detailed design of their own portals.
Some businesses have contended that the different approaches adopted
by tax administrations make it difficult for them to submit claims
in several Member States.
The document
18.3 Given the delay in some Member States in setting
up electronic VAT refund portals the Commission presents this
draft Directive to ensure that EU businesses in all Member States
can obtain their VAT refunds by allowing an exceptional six-month
extension for the first year, that is from 30 September 2010 to
31 March 2011.
18.4 The Commission suggests also, in the draft Directive,
that Member States harmonise some features of their national VAT
refund web portals to make them more inter-operable and accessible
for taxpayers. It proposes, subject to the opinion of the EU Standing
Committee for Administrative Cooperation, it be granted the power
to adopt and implement a more fully harmonized EU system.
The Government's view
18.5 The Exchequer Secretary to the Treasury (Mr
David Gauke) says that although at first sight the draft Directive
seems sensible and reasonable, the impact and consequences are
not straightforward and the Government has concerns about both
aspects of the proposal. He tells us first that:
- any extension of the deadline
for making claims will entail costly IT system changes for HMRC
and VAT refund agents;
- it will create operational problems for HMRC,
as it has deployed additional resources to deal with the anticipated
surge in refund claims ahead of the September 2010 deadline;
- it will create confusion for EU businesses as
it is very unlikely that any Member State would be able to change
their IT systems to accept late claims before the current 30 September
deadline expires;
- although the Commission has provided some background
information in its explanatory memorandum on the proposal there
is no detailed analysis or supporting evidence; and
- the Government has concerns that the proposed
deadline extension has not been fully thought through and that
it is a superficial knee-jerk response to lobbying by a small
number of EU businesses.
The Minister adds that the proposed extension to
the deadline would impose additional IT system change costs on
HMRC of between £100,000 and £150,000 (and could not
be implemented in time). It would also impose un-quantified costs
on VAT refund agents.
18.6 As regards the Commission's proposal that it
be granted additional powers to develop and implement a fully
harmonised pan-EU VAT refund system, the Minister says that:
- the Government questions whether
this is either necessary or appropriate;
- it has recently implemented a new web-based portal
in accordance with core requirements agreed by the Commission
and the adoption of new, revised requirements would require costly
amendment of the UK's IT system; and
- as the Commission's explanatory memorandum lacks
detailed analysis or supporting evidence, it would be inappropriate
to agree to what has been proposed.
18.7 Finally the Minister tells us that:
- the proposal does not currently
feature on any advance ECOFIN Council agenda, although it would
need to be adopted before the end of September 2010, when the
current deadline expires;
- given that the first Council working group discussion
on this proposal will not take place until 20 September 2010 the
timetable is unrealistic; and
- time would also need to be factored in for consultation
with the European Parliament and the Economic and Social Committee.
Conclusion
18.8 We agree with the Minister that this proposal
seems ill-considered and inappropriate. We note also the unrealistic
timetable. However, before considering the matter further we should
like to hear how Council consideration of the proposal develops.
Meanwhile the document remains under scrutiny.
| 
