This may have solved the problem in the venerable way, but the Court of Appeal ruled that it could go beyond those points. It examined the situation as a whole and examined the contract in the light of the surrounding circumstances. It took into account the whole history of the case and how the seller had never intended to charge VAT and had never claimed to do so. It examined the nature of the buyer (non-demanding) and found that payment had been made to the seller (or its group) prior to the conclusion of this contract. It took account of the delay in collecting the VAT charge and the fact that it was collected only after HMRC had demanded tax from the seller. One could call this model of chaotic fact, and it certainly put the seller in a dim light. “In the case of a service provider like you, I expect them to inform customers that they have unilaterally changed their terms and conditions. Such a company will have the ability to unilaterally change people`s contracts,” Khan said. There is a well-known principle in the design of purchase or rental contracts according to which prices are indicated without VAT, but the contract expressly reserves the right that the seller or owner can add VAT if necessary. The reason for this is the fact that any contract that does not mention that VAT can be added claims to charge only the exact amount. This is reinforced by the fact that VAT legislation treats the “consideration” for goods or services as an amount including VAT. There are a few exceptions, the most important of which is a change in the VAT obligation created by a change in the law and a decision by the seller to choose to tax the property after the “conclusion” of the contract, but before the delivery itself has been made. “There are cases where a service contract is fully taxable under VAT, others are not taxable, and others are prorated based on the nature of the contract and certain other elements,” Bassil said.
According to experts, there are many nuances of this transition period, including when a service is terminated, when an invoice is issued, and if the contract is considered continuous or periodic, which affects the status of a commercial contract. The Court of Appeal ruled in favour of the buyer. However, it did not entirely agree with the buyer`s main argument that the special provision indicating a price excluding VAT was totally contrary to the general provisions and that, therefore, such general provisions could not be applicable in most broadly similar cases. In interpreting the agreement as a whole, the Court of Appeal seemed inclined to accept such a contract as a reason in itself to add VAT despite the imperfections in its wording. This means that standard agreements are regularly issued without contractual VAT protection for the supplier and, although there is currently no VAT to pay, many contracts will go through the implementation dates. Dubai: As there was no form of taxation in the UAE in the past, companies are struggling to introduce language into their service contracts for the upcoming introduction of VAT on January 1. However, if the contract is inclusive or silent on issues, the service provider should try to “renegotiate it or insert a provision or tell the counterparty that VAT is coming” to avoid paying taxes payable on the 2018 side of the contract, Bassil added. Both sides have signed this agreement. Coincidentally, the seller refunded the payment to the buyer because it now had to make that payment to another party in its group, and the buyer duly refunded the agreed amount to the other group member. No one noticed that VAT had to be charged and the seller proceeded to conclude the transaction based on the number provided. A contract containing special provisions indicating the price without indication of VAT was then drawn up. It was also subject to general provisions, with a derogation according to which the special provisions prevailed over the general provisions […].
