The UK is among 13 EU countries that have agreed to take part in a test case to pilot a new EU mechanism involving private VAT ruling requests in relation to cross-border VAT disputes.
The European Commission's new pilot of cross-border rulings (CBRs) will allow participating EU member states to arbitrate cross-border VAT transaction disputes between themselves.
The move is expected to reduce the number of cases that have flooded the Court of Justice of the European Union (CJEU).
At present, when a taxpayer does not agree with the view taken by a tax authority, it can bring proceedings before the national courts which may end up before the CJEU. But time taken to reach a judgment is often lengthy.
The proposed introduction of CBRs will allow taxable persons planning cross-border transactions to one or more participating Member States to request a ruling in the participating Member State where they are registered for VAT purposes, with regard to the transactions they envisage.
The request must be introduced in line with the conditions governing national VAT rulings in that Member State. If two or more companies are involved, the request should only be introduced by one of them, also acting on behalf of the others.
Stephen Coleclough, the CIOT president, welcomed the pilot, which will limit itself to complex transactions with no guarantee that a CBR will be given for submitted transactions.
Coleclough said: 'This new pilot project offers a consumer and business friendly alternative to expensive and impractical court proceedings in several countries.
'VAT can represent a substantial proportion of the cost of a transaction and lack of clarity can become a significant disincentive to cross-border enterprise. Problems can arise when parties encounter potentially contradictory views of different countries' tax authorities. What businesses and customers want most is certainty when they negotiate transactions; we are encouraged that this system will go some way towards providing that.
'We have previously called for such a system of rulings that can speedily resolve problems3 and we hope that all those participating in this pilot will work hard to ensure its success so that it can be rolled out as an integral part of the EU VAT system for the benefit of business, its customers and member states.'
The 13 participating countries are Belgium, Estonia, Spain, France, Cyprus, Lithuania, Latvia, Malta, Hungary, Netherlands, Portugal, Slovenia and the UK.
The pilot, which began on 1 June 2013, is expected to end in December 2013 although it may be suspended or stopped earlier or extended, depending on the circumstances.
More details are available HERE
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