has won a six-year VAT battle over the treatment of business samples.
Court of Justice confirmed today that the UK’s rules around the tax
treatment on promotional free copies of music recordings were wrong.
HM Revenue & Customs had argued that EMI must account for VAT on the cost
of each free sample it gave, which amounted to £3.3m between 1987 and 2003.
Lorraine Parkin, head of VAT at
Thornton, said music businesses should lodge a claim with HMRC as
soon as possible for an overpayment refund made in the last four years.
The case also provided the ECJ with an opportunity to confirm that the UK’s
rules on the VAT treatment of business gifts are broadly correct. That means
that HMRC can continue to limit the numbers and value of business gifts that can
be provided by a business VAT free.
Sian Beusch, technical associate director at Baker Tilly said: “Businesses
who use promotional samples as sales tools across the music, drinks and retail
industries have been given an early Christmas present thanks to the ECJ
“Taxpayers distributing large volumes of samples should begin preparation of
their claims immediately, if they have not already done so.”
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