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HMRC internal manual

VAT Groups

HM Revenue & Customs
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General principles of VAT group treatment: what is single taxable person in UK legislation?

The High Court decided in The Commissioners of Customs and Excise -v- Kingfisher PLC QB [1994] STC 63, that a VAT group is treated as a single taxable person, identified with the company nominated as the representative member.

Kingfisher was the holding company of a large corporate group most of which were retailers. One of the companies in the group, Time Ltd, supplied customer credit services for use in the retail outlets operated by the other group members, and it issued credit cards to customers for this purpose.

Kingfisher did not account for VAT on the sales paid for using the credit cards issued by Time until the cardholders had paid the amounts in question to Time. The Commissioners raised assessments ruling that Kingfisher should have accounted for VAT when the sale took place, as with other credit cards.

Kingfisher appealed against the assessments, maintaining that sales paid for with Time’s credit cards are different from sales paid for using other credit cards, because the credit had been supplied by one of Kingfisher’s subsidiary companies, rather than by an independent operator.

The Tribunal chairman allowed Kingfisher’s appeal and held that, under the VAT Act 1983, section 29 [now the VAT Act 1994 section 43], a group of companies should “be treated as if it were a single body corporate”. Kingfisher was deemed to be carrying on the retail businesses of its retail subsidiaries and the credit business of Time Ltd. Kingfisher plc, (1991), VATTR 47, Manchester October 1990 (5336).

The Commissioners appealed to the High Court against the tribunal’s decision. But the judge, the Hon. Mr Justice Popplewell upheld the tribunal decision holding that, “there would in my view exist anomaly if not injustice if section 29 (now section 43) did not cause a group to be treated as a single taxable entity through its representative member not materially distinguished from a single body corporate having separate trading departments”.