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UK consults on VAT Grouping rules

  • Aug 29, 2020 | Richard Asquith

The UK’s HMRC has issued a consultation on its VAT Grouping rules.  This enables related companies with intra-company trading to use a single VAT number to simplify compliance and minimise otherwise unnecessary VAT cash payments. Just one of the involved entities (corporate body, individual or partnerships) in a VAT Group has the reporting requirement, and they are known as the representative member.

The consulation will cover three areas:

  1. Establishment provisions - persons must either be established or have a fixed establishment in the UK and covers the Skandia judgement. This includes the UK’s whole establishment provision which may be distorting company behaviour by organising their internal structures to benefit from the place of supply rules in different countries. It is possible for supplies of legal, IT or administrative services supplied to a fixed establishment in another country to be channelled to the same entity’s UK fixed establishment. 
  2. Compulsory VAT Grouping – and whether the UK should copy other jurisdictions which enforce this.
  3. Grouping eligibility criteria for businesses currently not in legislation, including limited partnerships. However, HMRC offers an extra-statutory concession whereby these entities can join a VAT group. 

Need help with your UK VAT compliance?

Researching UK VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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