HM Revenue & Customs has reversed its stance on UK VAT grouping, stating that EU case law restrictions no longer apply. The change allows overseas establishments of VAT‑grouped businesses to be treated as part of the group even in EU states that do not use whole‑entity VAT grouping, and invites firms to reclaim overpaid VAT. The policy, announced after the 2025 Budget, seeks to simplify cross‑border compliance and attract foreign investment.
HMRC reversed its position that EU case law restrictions applied to UK VAT grouping, allowing overseas establishments of VAT‑grouped businesses to be treated as part of the group even in EU states without whole‑entity VAT grouping.
The announcement followed the 2025 Budget and was published in Revenue and Customs Brief 7 (2025).
HMRC invited businesses that had accounted for VAT under the 2015 guidance to submit error correction notices to reclaim overpaid VAT.
HMRC expanded the definition in VAT Notice 700/2 to include enhanced risks to revenue collection and distortion in the liability of the group’s supplies.
Get VAT and indirect tax news delivered to your inbox twice a week.
No spam. Unsubscribe anytime.
GOV.UK · 6 days ago
This guidance outlines the Goods Vehicle Movement Service (GVMS) procedures at the border and during crossings. It details the check‑in process, the requirement for carriers to notify HMRC immediately at departure, and how to verify GMR status. The guidance ensures compliance with automated customs processes for goods vehicles.
Crowe · 7 days ago
On 9 March 2026 the First‑Tier Tribunal ruled that the reduced 5% VAT rate on electricity applies to public EV charging points, extending the domestic rate to these supplies. The decision is based on the 1,000 kWh per customer per month threshold and could allow charging providers to claim refunds for up to four years. The ruling is not yet legally binding until HMRC accepts it or the case is finalized.
LinkedIn Article by Laura Chipp · 8 days ago
The article explains how the VAT classification of a travel business as an agent or principal determines whether VAT is charged on the full travel supply or only on the intermediary commission. It outlines the key contractual and commercial factors that influence this classification and highlights the financial implications for finance teams, including VAT accounting, input VAT recovery, and the applicability of the Tour Operators Margin Scheme (TOMS).
Pinsent Masons · 11 days ago
A parliamentary question and Treasury response have clarified that paid entries in UK prize draws are not exempt from VAT and will be taxed at the standard 20% rate. The voluntary code of conduct for prize draw operators, aimed at improving consumer protection, will take full effect on 20 May 2026. The sector is valued at £1.3 billion annually.
ICAEW · 12 days ago
The Supreme Court’s December 2025 ruling reaffirmed the BLP barrier, stating that VAT incurred on fees for share sales remains non‑deductible because of a direct and immediate link to an exempt supply. The decision effectively ends the argument that share‑sale proceeds can be used to recover VAT on overheads. Businesses must therefore plan VAT recovery strategies early and seek specialist advice before raising capital through share sales.
GOV.UK · 12 days ago
This HMRC internal manual provides guidance on the VAT cost sharing exemption, detailing the conditions, interpretation, and procedural aspects for applying the exemption. It serves as a reference for HMRC staff and VAT professionals on how to apply the exemption in practice.
