Victory looms for HMRC in Halifax case

Victory looms for HMRC in Halifax case

European Court ruling to end certain VAT refunds for banks

HMRC logo

HM Revenue and Customs is expected to triumph in a case involving Halifax
Bank, allowing the taxman to prevent banks reclaiming as much as £1bn in VAT in
the future.

Tomorrow, the European Court of Justice is expected to rule that a scheme set
up by Halifax, in the construction of a call centre, should not allow the bank
to reclaim £7m in VAT bills, the Financial Mail reported.

VAT rules on banks allow them to reclaim only a small proportion of the VAT
on building work, but Halifax set up a separate company to act as a middleman in
the building of the call centre. As a construction services business it could
then reclaim much more VAT.

Last April, the European Advocate General gave an initial opinion ruling
against Halifax.

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