European Court considers an audacious challenge concerning the direct selling sector
The hearing of Case C-305/16 Avon Cosmetics v HMRC took place on 31 May 2017. It is a case which the European Court was told by Avon Cosmetics is keenly awaited by the direct selling sector. Avon launched an audacious challenge to the lawfulness of a derogation granted to the United Kingdom by the European Council in 1989, which effectively replicated a derogation granted in 1985. The derogation permits the UK to collect VAT as output tax on the open market value of goods sold to consumers through “Avon ladies” who are not VAT registered. It was argued by Avon that the UK is obliged to implement the derogation so as to allow an input tax deduction for small samples and other demonstration items and that the Council’s initial authorisation was unlawful. Advocate General Bobek will release his opinion on 7 September 2017.
Melanie Hall QC represented the UK.