UK VAT Grouping Reform: Impact on Cross-Border Branches and VAT Recovery Opportunities in 2025

HMRC has revised VAT-grouping rules, treating overseas branches as part of the UK VAT group from 26 November 2025.
Cross-border intra-group services are no longer taxable supplies, and the reverse charge no longer applies to internal services from overseas branches.
The change simplifies VAT accounting and may allow some groups to reclaim up to four years of overpaid VAT.
The update is interpretive (not legislative) and may have significant operational and financial impacts, especially for partially exempt or VAT-restricted sectors.
Not all organisations are affected, but those with overseas branches in UK VAT groups should review their compliance and potential VAT recovery.

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.