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As reported in The Times the European Court has rejected the claim made by Avon Cosmetics plc that a derogation from EU law which authorised the UK to charge VAT on sales by direct selling companies based on their open market value, was unlawful. The Court accepted all arguments advanced on behalf of the UK and concluded that the derogation was lawful, proportionate and did not breach the principles of fiscal neutrality by failing to allow Avon ladies a VAT credit in relation to the purchase of demonstration items. Avon’s inability to claim such a credit was merely the consequence of its commercial decision to use the direct selling marketing model. Melanie Hall QC represented the UK. This judgment brings to an end litigation which has spanned over a decade.
Click here for a copy of the judgment.