Brief 3 (2016): Review of VAT grouping following two | KPMG | UK

Brief 3 (2016): Review of VAT grouping following two CJEU Judgments

Brief 3 (2016): Review of VAT grouping following two

HMRC have released a Brief on the Government’s decision to launch a consultation on VAT grouping provisions and highlight the planned approach.


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HMRC have released a Brief to inform interested parties of the Government’s decision to launch a consultation on VAT grouping provisions following the following the CJEU Judgments Larentia + Minerva and Marenave (C-108/14 and C-109/14) and Skandia (C-713). The Brief notes that in Larentia + Minerva the CJEU found that Member States may only restrict VAT grouping to legal persons, where those restrictions are appropriate and necessary in order to prevent, abuse, avoidance or evasion. The Brief adds that the Government expects to make changes to UK law and VAT grouping provisions.

These changes are likely to include:

  • extending VAT grouping to non-corporate bodies; and
  • identifying new rules to determine ‘close economic, financial and organisational’ links for corporate and non-corporate bodies, replacing the current “control” test based on a company law definition of a subsidiary.
HMRC will also use this opportunity to find out what businesses and their representatives think about other grouping related matters, particularly those where the provisions differ across EU member states, as identified in the Skandia case.
The time-line is as follows:
  • January and February 2016 - HMRC will meet with business representative bodies to explore and develop new ideas on VAT grouping;
  • February and March 2016 - HMRC will use the feedback to develop a series of policy options. These will form part of the formal consultation;
  • Spring 2016 - HMRC will launch a formal written consultation. This will provide anyone who has an interest in VAT grouping with an opportunity to reflect on the policy options and proposals developed during the informal dialogue. HMRC will ask for feedback on the impact and workability of these proposals to help us determine the final shape of VAT grouping provisions. The formal consultation period will last for 12 weeks;
  • Summer/autumn 2016 – HMRC will publish a summary of the formal consultation responses, and use it to finalise the government’s proposals for reform of VAT grouping provisions.
To read the Brief click here.
For further information contact:

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