ICAEW Tax Rep 131/18: Finance Bill 2018-19 VAT grouping and group eligibility

Released 04 December 2018

The Institute of Chartered Accountants in England and Wales (ICAEW) has published comments on Finance Bill 2018-19 clauses on VAT grouping and group eligibility.

Finance Bill 2018-19, Cl. 52 and Sch. 17 amend the Value Added Tax Act 1994, s. 43A to widen the eligibility criteria for VAT grouping and allow non-corporate entities to join a VAT group. A requirement of the clause is to implement the decision of the European Court of Justice (ECJ) in EC v UK (C-86/11), where it was held that the Commission’s interpretation (that VAT grouping be restricted to persons who are taxable persons) was not correct. As originally drafted, VATA 1994, s. 43A(4)(c) and s. 43A(5)(c) were contrary to the ECJ decision in C-86/11 and Commission v Ireland case C-85/11 (which related to the inclusion of businesses making wholly exempt supplies in VAT groups). Although the draft provisions have been amended, the ICAEW considers the changes are insufficient to comply with the ECJ decisions because the inclusion of the words “carrying on a business” mean non-taxable persons will not be allowed to join a VAT group. The ICAEW considers these words should be removed from the provisions.

View ICAEW Rep 131/18.

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