Revised VAT grouping rules and the Skandia judgment
Published 26 November 2025
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This publication is available at https://www.gov.uk/government/publications/revenue-and-customs-brief-7-2025-revised-vat-grouping-rules-and-the-skandia-judgment/revised-vat-grouping-rules-and-the-skandia-judgment
Purpose of the Brief
This Revenue and Customs Brief replaces:
- Revenue and Customs Brief 2 (2015)
- Revenue and Customs Brief 18 (2015)
- Revenue and Customs Brief 23 (2015)
Revenue and Customs Briefs 2 (2015) and 18 (2015) set out HMRC’s position following the Court of Justice of the European Union’s (CJEU) Skandia (C-7/13) judgment, under which businesses with branches or head offices in countries that applied Skandia were required to treat certain intra-entity supplies as taxable for VAT purposes. Revenue and Customs Brief 23 (2015) provided further information on HMRC’s position.
This brief sets out HMRC’s updated position on the UK VAT treatment of intra-entity services involving establishments located in an EU member state that are part of a UK VAT group.
The brief also provides details on how businesses that may have previously accounted for VAT under the ‘reverse charge mechanism’, in line with the 2015 Revenue and Customs Briefs, may submit an error correction notification to reclaim any VAT that was overpaid as a result of that treatment.
Who should read this brief
UK VAT groups with members in an EU member state impacted by Revenue and Customs Brief 18 (2015).
Background
Revenue and Customs Brief 2 (2015) set out HMRC’s revised policy for the VAT treatment of intra-entity services following the CJEU’s judgment on the Skandia America Corp case (C-7/13). This position was subsequently confirmed and expanded upon in Revenue and Customs Briefs 18 (2015) and 23 (2015). Under that policy, UK businesses were required to account for VAT under the reverse charge mechanism on certain intra-group services as set out in those briefs.
HMRC has now reviewed this position. From 26 November 2025 the position set out in those Revenue and Customs Briefs is no longer effective.
This change reflects a revised interpretation of existing UK VAT law and does not require legislative amendment.
Actions going forward
HMRC now considers that an overseas establishment of a business 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.
HMRC acknowledges that some VAT groups may have accounted for VAT in line with the previous guidance and may now be eligible to reclaim overpaid VAT through the error correction notification procedure.
VAT groups that have accounted for VAT under the reverse charge mechanism in line with HMRC’s previous policy may submit an error correction notification to reclaim any overpaid VAT. Read more details on how to correct VAT errors and make adjustments or claims (VAT Notice 700/45). VAT groups should consider the anti-avoidance legislation in section 43 (2A) the VAT Act 1994, as described in section 7 of Group and divisional registration (VAT Notice 700/2), when filing these notices.