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Astra Zeneca Case Puts Salary Sacrifice Plans Under Scrutiny
The Astra Zeneca ruling gives revenue authorities an opportunity to collect overdue VAT on employee benefit salary sacrifice plans - in the UK HMRC's case this could be up to four years of back tax. Taxand UK details a summary of court findings and the implications for salary sacrifice and flexible benefit plans.
The recent 29 July 2010 European Court of Justice judgment on the case of Astra Zeneca UK Ltd v Commissioners for HMRC clarifies the position in respect of VAT charged on the provision of retail vouchers to employees as part of their remuneration.
The judgement on the Astra Zeneca case will affect Europe wide companies, not just UK companies. Businesses operating salary sacrifice schemes should review the benefits available to employees to determine if this case will have an impact on the value of benefits to the employees or on the cost to the business of providing them.
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