HMRC Updates VAT Grouping Rules to Strengthen Revenue Protection and Prevent VAT Loss

• HMRC updated VAT Notice 700/2 regarding VAT group and divisional registration, focusing on “protection of the revenue” and “revenue loss.”
• VAT grouping allows multiple entities to be treated as a single VAT registration; eligibility was expanded in 2019 to include more entity types.
• HMRC can refuse or remove VAT group members if grouping may cause VAT loss, especially in cases of VAT avoidance or risk to revenue collection.
• “Revenue loss” refers to VAT not charged on intra-group transactions, particularly when some group members make exempt supplies and can’t reclaim VAT.
• HMRC will use its powers if VAT grouping is used mainly to avoid VAT on supplies from overseas branches, regardless of UK establishment status.

Source: marcusward.co

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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