Individuals and partnerships may be added to a VAT group

Wed 17 Jul 2019

It will soon be possible to add an individual or a partnership to a VAT group with UK body (or bodies) corporate, provided the individual or partnership concerned controls the UK body, or all of the UK bodies corporate, and is established, or has a fixed establishment in the UK.

This is as a result of new rules included in FA 2019 (s53 and Sch 18). However, these changes are only effective from a date to be set in regulation – and this has not yet been set. A recent First tier Tribunal case (Baillie Gifford & Co) has demonstrated, however, that it is possible to achieve this already by relying on EU law principles.

In the case concerned, the company was able to form a group with a Scottish Partnership, despite the fact that the partnership was not a body corporate for the purposes of s43A VATA. The Tribunal considered that conforming legislation can be applied to VATA following the CJEU’s decision in Larentia and Minerva.

While the case was decided on its own particular circumstances, it is perhaps worth pointing out to clients for whom this may be an issue (for example partnerships that control the companies it wishes to form a VAT group with) that it is possible.

Please get in touch with a member of the Mazars indirect tax team for further advice on VAT grouping.

Chris Lallemand Senior Tax Manager

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