HMRC has reversed its stance on UK VAT grouping, allowing overseas establishments of UK VAT groups to be treated as part of the group even in EU member states that do not allow whole entity VAT grouping. The change, announced on 19 January 2026, follows a November 2025 brief that also invites businesses to reclaim overpaid VAT. The shift aims to simplify cross‑border compliance and attract foreign investment, while expanding revenue‑protection rules.
From 19 January 2026, HMRC announced that overseas establishments of businesses VAT grouped in the UK should be treated as part of that VAT group even when located in an EU member state that does not operate whole entity VAT grouping.
In November 2025, HMRC’s Revenue and Customs Brief 7 invited businesses that had accounted for VAT under previous guidance to submit error correction notices to reclaim overpaid VAT.
Sections 43, 43A, and 43B of the Value Added Tax Act 1994 govern UK VAT grouping, allowing two or more eligible persons to be treated as a single taxable person for VAT purposes.
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UK Government · 5 days ago
HMRC’s guidance explains that intermediaries can register for the Import One‑Stop Shop (IOSS) scheme from 1 April 2026 and must submit a monthly IOSS VAT return on behalf of each client. The return must capture VAT on low‑value imports to EU and Northern Ireland consumers, use ECB exchange rates, and requires nil returns if no sales occur. Intermediaries must also keep 10‑year records and can correct returns within three years.
Law360 · 7 days ago
A London appeals court dismissed a UK telecommunications provider’s bid to recover £51.1 million in VAT payments, agreeing with a lower court that the VAT is owed when the provider supplied services. The decision confirms the provider cannot recover the VAT paid on its telecom services.
Bloomberg Tax · 7 days ago
The Upper Tribunal ruled that Lycamobile UK must pay more than £50 million in VAT, requiring the operator to charge VAT on the full price of prepaid mobile bundles at the point of sale, rather than only on services actually used. The decision, dated 12 Feb 2026, overturns Lycamobile's previous VAT calculation method.
UK Government · 8 days ago
This HMRC internal manual provides guidance on how VAT applies to local authorities and other government and public bodies in the UK. It covers various categories such as non‑business activities, police authorities, NHS capital projects, and local government partnership programmes. The manual serves as a reference for VAT compliance and exemptions for public sector entities.
Seeburger · 12 days ago
The UK will require all VAT invoices to be e‑invoiced by 2029, mandating machine‑readable formats and accredited transmission. The article outlines the scope, Peppol alignment, and a step‑by‑step timeline for 2026‑2028 to help finance, IT and procurement prepare. It highlights key milestones such as selecting an access point, adopting a canonical data model, and piloting with trading partners.
TaxJournal · 12 days ago
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