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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LinkedIn Article by Emma Jones · about 19 hours ago
The article explains the UK Cash Accounting for VAT scheme, which allows VAT-registered businesses to pay VAT only when they receive payment, aligning tax liability with cash flow. It highlights the £1.35 million projected turnover threshold, the scheme’s benefits and limitations, and ongoing discussions about raising the eligibility threshold.
Bloomberg Tax · 4 days ago
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.
LinkedIn Article by MHA · 4 days ago
The newsletter covers recent VAT developments, including a new EU customs duty for low-value parcels, a UK Supreme Court ruling affecting VAT recovery on fundraising activities, and a change in VAT treatment for locum doctors following HMRC's decision not to appeal a tribunal ruling.
GOV.UK · 4 days ago
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Macfarlanes · 5 days ago
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This guidance handbook from HMRC explains customs authorisations in detail, covering their purpose, eligibility, application procedures, compliance requirements, guarantee types, authorisation management, appeals, renewal, and the legal framework. It serves as a technical reference for businesses and customs officials to correctly apply for and manage customs authorisations.
