HM Treasury statement on infraction proceedings on VAT treatment of certain commodity derivatives trading
Released 09 March 2018
HM Treasury has issued a statement regarding the European Commission’s notification of infraction proceedings on the UK’s VAT treatment of certain commodity derivatives trading.
On 8 March 2018, the European Commission provided notification by letter of formal notice of infraction proceedings against the UK in respect of VAT treatment of certain commodity derivatives, trading under the Terminal Markets Order (The Value Added Tax (Terminal Markets) Order 1973 (SI 1973/173)), which allows a specific VAT zero rate for derivative transactions in spots, futures (and options on) commodity contracts, when traded on an exchange. The letter of notice sets out the Commission’s initial views on the UK’s VAT treatment of certain exchange traded commodity derivatives, and invites a response from the UK Government within two months. The issuance of the letter has no immediate effect on UK tax law and the tax treatment of commodity derivatives remains as it stands unless and until such time as it is changed and therefore past and current trading activity under SI 1973/173 is not affected by the issuance of the Article 258 letter.
For more information, view the press release Statement on infraction proceedings on VAT treatment of certain commodity derivatives trading.