The case has been referred to the European Court of Justice after a VAT tribunal highlighted six points that needed clarification by the European court.
The UK government’s argument centres around the assertion that a public body could not be involved in an economic activity, meaning that VAT would not have been paid.
However the UK’s five 3G licence holders – Vodafone, O2, Orange, Three and T-Mobile – are arguing that the auction was conducted in a commercial capacity and therefore VAT would made up part of the overall £22.5bn cost, meaning it could be reclaimed.
‘The meaning of the word telecommunications could decide this case,’ Paddy Behan, a VAT specialist at Grant Thornton told The Financial Times. ‘If the operators’ definition is accepted by the court, it is hard to see how they could lose.’
Making Tax Digital will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs
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The drive towards a fully digital tax regime is an admirable one, but mandation is simply wrong, according to one of the UK's most senior tax technology practitioners - Paul Aplin
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