VAT Insights - April 2026

The Principal VAT Directive excludes from exemption the management of credit except where the management is carried out by the person granting it. That naturally begs the question what happens if the person who originally granted the credit is no longer the creditor but continues to manage it? That is often the position where debt is securitised via an SPV, where the SPV does not have the ability to manage the credit it acquires and reimburses the originator of the debt for doing so. The Advocate General in Veronsaajien oikeudenvalvontayksikko v A oy (Case T-184/25) has now considered this issue and has opined that exemption is restricted to the current creditor only. If followed by the CJEU, this will be an important decision that may impact securitisations arrangements across the EU. It is understood that different Member States currently take different approaches to the scope of the exemption in this scenario and the final decision should bring certainty (if also some disruption) to the VAT treatment of these and similar arrangements.

In this edition, as well as looking at the AG opinion on the scope of the VAT exemption for management of credit in the context of a securitisation, we also cover the following developments:

• A CJEU decision on the scope of the VAT exemption for transactions in currencies in the context of online games
• A CJEU decision on whether a retailer loyalty scheme providing free goods on further purchases fell within the voucher regime
• An FTT decision on the VAT liability on supplies of public EV charging direct to consumers
• An important decision in the Healthcare industry on the impact of price rebates made by a manufacturer of medicines to the UK government based on the volume of its supplies to third party wholesalers and pharmacies which could have wider implications, for example, in relation to cashback and incentive schemes; and
• A Court of Appeal decision that grant funding from the government for certain education and vocational courses amounted to consideration for the supplies to students.

In addition, we produce more detailed reports on the most significant tax developments so if you scroll to the bottom, there's a list of the most important issues we have covered, with links to our more detailed reports.

If you are interested in finding out more about the below or have a specific indirect tax query, please don't hesitate to get in touch.

VAT, securitisation vehicles and ‘management of credit by the person granting it’

The Advocate General’s opinion in Veronsaajien oikeudenvalvontayksikko v A oy (Case T-184/25) concerns the VAT treatment of credit management provided as part of securitisation arrangements. A was part of a banking group which granted loans. It entered into arrangements to sell those loans to a securitisation vehicle, B. However, the management of the loans remained with A and it received payments from B in return. Were those payments exempt from VAT as the ‘management of credit by the person granting it’? The AG has opined not; that the exemption is limited to the current creditor as the rationale for the exemption is to ensure that that all services provided by the creditor in the context of a credit relationship are exempt from VAT. Separately, the AG also questioned whether the sale of the debts to the securitisation vehicle would be correctly viewed as an exempt transaction by reference to the earlier decision of the CJEU in Swiss Re Germany Holding (Case C-242/08).

The decision by the CJEU in this case will be important in the context of the VAT treatment of securitisation vehicles in the EU. In the UK, the decision will not be binding; HMRC currently accept that the management of credit by the original creditor would fall within the scope of the exemption in a typical securitisation involving an assignment of receivables. However, in circumstances where legal title to the debts has been transferred to a third party, HMRC already consider that it is only the management by that third party that qualifies as exempt (VAT Finance Manual at VATFIN3240).

Read our Insights article here

VAT treatment of in-game currencies

The CJEU in Žaidimų valiuta’ MB v Valstybinė mokesčių inspekcija prie Lietuvos Respublikos finansų ministerijos (Case C-472/24) has confirmed that transactions in an in-game currency do not fall within the exemption in Article 135(1)(e) of the PVD for currency transactions. The case concerns transactions in ‘gold’ used as a currency for purchasing various benefits within an online computer game called ‘Runescape’. The taxpayer essentially traded in second-hand in-game gold for profit. Article 135(1)(e) covers ‘currency, bank notes and coins used as legal tender’ and the in-game gold clearly was not legal tender. Although the Court accepted in Hedqvist that Bitcoin could fall within the scope of this exemption even though it was not legal tender, the CJEU noted that for a non-traditional currency to qualify it must meet two conditions: (a) the currency must have been accepted by the parties to a transaction as an alternative to legal tender and (b) it must have no purpose other than to be a means of payment. It was clear that the in-game currency did not meet those requirements.

See our Insights article here

VAT, vouchers and loyalty points

In Skatteverket v Lyko Operations AB (Case C-436/24), the CJEU has held that a loyalty scheme providing points on purchases which could be redeemed for further items on making a future purchase did not amount to a voucher for VAT purposes. As such, the arrangements did not involve multi-purpose vouchers and consideration allocated to unused points did not drop out of the scope of VAT. This is one of a number of recent cases involving points/vouchers where taxpayers have sought to argue that any consideration attributable to unused elements of a supply fall out of account.

In this case, the taxpayer lost on the narrow issue that the loyalty points did not qualify as a voucher. Since the points awarded to Lyko customers could only be used in Lyko’s shop only in combination with a new purchase of products, the points did not create the necessary obligation on the part of the supplier to accept them as consideration for a supply of goods. However, unlike the CJEU, the AG in this case went on to consider the position had the points qualified as multi-purpose vouchers. The AG suggested that where a voucher does not represent a specified value, it has no effect until redeemed. Consequently, if the points are not redeemed, the taxable amount of the first purchase remains unchanged. However, since the CJEU did not comment on this aspect of the AG’s analysis, it will have to await consideration in a future case.

Read our Insights article in full here

Supplies of public EV charging

In Charge My Street Ltd v HMRC [2026] UKFTT 318 (TC), the FTT has held that, contrary to HMRC’s explicit guidance (VAT Notice 701/19), supplies made by a provider of electricity to electric vehicle (EV) owners at public charging points (CPs) are, in principle, subject to the VAT reduced rate of 5% for supplies of domestic fuel. The FTT was persuaded that where the taxpayer made supplies direct to the consumer, then the supplies met the requirements in Note 5(g) of VATA 1994 Sch 7A Group 1 so as to be treated as made for ‘domestic use’.

The decision would appear to bring into line the VAT treatment of home charging of EV vehicles and public charging of such vehicles where the supply is made direct from the CPO to the driver. However, the FTT agreed with HMRC that where supplies of electricity were made via an intervening ‘third party app’ used by the driver, CMS supplied the app provider with electricity which on-supplied it to the driver. In those cases, the 1000kWh de minimis was breached and the supplies did not fall within Note 5(g). As the decision is contrary to HMRC’s published guidance on public EV charging, it seems inevitable that HMRC will seek to appeal..

Read our Insight article here

VAT and price rebates

The Upper Tribunal has held that payments made by a manufacturer of medicines to the UK Department of Health and Social Care (DHSC) did not qualify as price reductions of earlier supplies made by that manufacturer to wholesalers and pharmacies: Boehringer Ingelheim Ltd v HMRC [2026] UKUT 135. Whilst the DHSC was economically responsible for ultimately funding the NHS, the ultimate recipient of supplies of the medicines, that was not sufficient for the payments (which operated as a form of price control) to amount to a refund of consideration on the earlier supplies. A price reduction for these purposes required there to be a direct link between the repayment and the consideration for the original supply. In this case, that direct link was lacking to the extent that the original supplies were made to wholesalers and pharmacies rather than directly to the DHSC and the fact that the DHSC was ultimately responsible for funding such supplies was insufficient.

The UT also agreed with HMRC that, to the extent that any medicines were ultimately supplied through the chain to the final consumer as a zero-rated supply, no price reduction could be applied even where the original supply was to the DHSC. This was because to allow a price reduction in such circumstances would breach the principle of fiscal neutrality and lead to an absolute tax loss to the Exchequer. This decision may have wider implications for cashback, rebates and other loyalty payments, which will generally not reduce the VATable value of underlying supplies unless they operate as clear price reductions between the same contracting parties. Where loyalty payments are treated as price reductions, it will therefore be necessary to consider carefully whether a sufficient direct link to the relevant supplies exists.

Read our full Insights article here

VAT and grant funding

The question whether government or other funding amounts to consideration for a supply can be particularly difficult. Back in 2020, HMRC won an Upper Tribunal case concerning government grant funding arrangements for the provision of education and vocational training, despite the issue of whether the funding was “consideration” being found against them. Unable to appeal that element of the decision, HMRC have now essentially relitigated the issue up to the Court of Appeal in Colchester Institute Corporation v HMRC [2026] EWCA Civ 363.

The Court of Appeal has now confirmed that earlier decision that grant funding arrangements put in place by government agencies to fund a college in relation to the provision of education and vocational training to young people amounted to consideration for those supplies for VAT purposes. Ultimately, there was a sufficient direct link between the funding and the provision of services to students even in the absence of the allocation of amounts to specific individual supplies and this was not simply a case where CIC was being funded generally on condition that it provide eligible courses.

Read our Insights article here

Other issues we have recently covered

Reporting company payments to participators: HMRC consultation

HMRC has published a consultation on proposals to introduce new requirements to report transactions between close companies and their participators to HMRC. The consultation seeks responses on these proposals, including the scope of the transactions to be included and the specific requirements as to what will need to be reported, including the format and timing.

Taxation of stablecoin: call for evidence

The government has published a Call for Evidence on the tax treatment of stablecoin. Stablecoin are currently treated in the same way as other cryptoassets for tax purposes. However, with their potential to play a more significant role in both wholesale and retail payments in the future, the government is considering whether this treatment is appropriate going forwards, and whether it should be considering making changes.

HMRC transfer pricing and DPT statistics for 2024/25

HMRC has published their most recent transfer pricing and Diverted Profits Tax (DPT) statistics for the period 2024 to 2025. HMRC's transfer pricing yield reached a record high in the 2024/25 financial year supported by a sustained upward trend in recent years. We have seen HMRC placing considerable emphasis on transfer pricing compliance and the scrutiny of arm's length pricing of transactions through the publication of Guidelines for Compliance (GfC7) in 2024. The statistics make interesting reading and provide valuable insights into HMRC's approaches and priorities to international taxation, which should be carefully considered by any multinational operating in the UK.

Uncertain tax treatment regime: consultation on extension

HMRC has published a consultation on extending the circumstances in which taxpayers are required to disclose any uncertain tax treatment (UTT) in their tax returns. The consultation proposes that the requirement to disclose an uncertain tax treatment should be extended to individuals and trustees, a range of additional taxes and that a further trigger based on the position where HMRC's view is not known should be added. In addition, the government proposes to tighten the existing exemption which applies where a business reasonably believes that HMRC is already aware of the uncertainty.

GAAR applied to intra-group restructuring: Luxembourg tribunal ruling

The Luxembourg Tribunal has denied a tax loss from intra-group restructuring, confirming GAAR applies where losses lack economic substance despite formal legal validity. This decision confirms a principle of Luxembourg tax jurisprudence: tax consequences must reflect economic substance. Losses generated solely through intra-group arrangements, without a real economic validity, risk or autonomous business rationale, may be disregarded for tax purposes, even where the underlying transactions are legally valid and formally correct.