The 21 October 2026 edition of KPMG’s Indirect Tax Weekly Talking Points examines two recent UK First-tier Tribunal (FTT) decisions addressing the recovery of VAT wrongly charged in post-Brexit cross-border scenarios and the application of the legitimate expectation principle in VAT assessments. These cases highlight ongoing complexities in the UK’s retained EU VAT law following the Transition Period end, particularly regarding distance selling rules, import VAT accounting, and HMRC’s administrative practices. The analyses provide practical guidance for businesses seeking to recover overpaid VAT and challenge assessments based on HMRC guidance changes.
Key Takeaways
- Wrongly Charged VAT Recovery Post-Brexit: The FTT confirmed that UK businesses can recover VAT incorrectly charged by EU suppliers on B2C distance sales where the UK’s new distance selling thresholds and One Stop Shop (OSS) rules were misapplied, but strict time limits under Section 80 VATA 1994 apply, requiring claims within four years of the due date.
- Legitimate Expectation in VAT Assessments: The tribunal held that HMRC’s published guidance created a legitimate expectation that a specific VAT treatment would be accepted; when HMRC departed from that guidance without notice, the assessment was invalidated, reinforcing the principle that taxpayers can rely on clear, public HMRC guidance.
- Practical Compliance Actions: Businesses should audit historic cross-border transactions for misapplied VAT, file protective claims before limitation expiry, and document reliance on HMRC guidance to preserve legitimate expectation arguments in future disputes.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
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