Avoidance, like beauty, is in the eye of the beholder.

In 1988, government ministers said that they will mitigate the effects of the decision of EC v UK of 1988, by introducing the option to tax for commercial property.

Bizarrely, by 1997 this retrospectively became “mitigate but only for taxable businesses”.

Bizarre but true, but hey, when has any part of government bothered with the inconvenient truth?

Even though HMRC were trounced in the CJEU, they still believe they are right (or desperate for cash).

And we have another case of denial in the face of the obvious, and that is the proposed VAT avoidance disclosure regimes.

OK VAT avoided is anything which reduces a VAT payment of increases a VAT repayment in a way which HMRC think is not lawful, until they decide otherwise.

For example, under the current regime, Scheme 1 makes selling properties you are going to let so as to make a zero-rated supply of a new house a heinous designated scheme.

So, do not do it.

Unless the year is after 2008, you are a housebuilder, and there is a recession so you are having to let new built houses instead of selling them and then HMRC issue a VAT information sheet telling you how to do a designated avoidance scheme!

The new draft regulations show little change form before save to switch the obligation to report on to the adviser rather than the taxpayer who even if they know what to do, probably would not know how.

So even though EU regulation has dealt with the Debenhams credit card scheme, which according to the case report, was known as PITA, that is still going to be caught.

We all know it is wrong to amortise irrecoverable VAT through leasing even though the CJEU said it is not in Weald Leasing (also the taxpayer does actually pay more VAT than they would otherwise have done and is in effect paying VAT on a finance charge).

I could go on with the option to tax circularity which HMRC have been grappling with since they created it, taxable supply unless recipient is exempt in which case it is exempt so in which case the rule disapplies, so the option to tax has effect but…

And as for hallmarks the new regulations go further and catch VAT avoidance IN ANY MEMBER STATE!

Since when has HMRC been the guardian of everyone else’s VAT regime?

So apart from the above, and the new regs which require advisers to snitch on their clients for advising upon perfectly lawful schemes, the new rules are entirely proportionate!

So good news for VAT litigators!

But seriously, what are HMRC looking for?

Anomalies between the treatment different member states of the same transaction a la RBS Deutschland?

(If you are wondering, HMRC lost)

Timing of invoices to be issued in the first day of the quarter?

Or some other heinous scheme?

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