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HMRC internal manual

VAT Groups

General principles of VAT group treatment: when is an intra group reverse charge not due?

The “intra-group reverse charge” will not become due if:

  • “the supplier” makes a supply of services to a fellow member of the same group entirely out of its own resources, or
  • the supply by “the supplier” to the “UK member” would be exempt if it were made in the UK.

Examples of the above are:

Company (A) supplies computer consultancy services, using only its own resources, to Company (C). No VAT is due on the supply as this is a normal intra-group supply disregarded under section 43(1)(a).

A buys in financial services of a type falling within Schedule 9, group 2 or 5 of the VAT Act 1994 and supplies them on to C. Because these services would be exempt if they were made by one UK trader to another, no VAT will be due on the supply and the supply on to C will continue to be disregarded under section 43(1)(a).

Note: No account will be taken of the value of these “intra-group reverse charges”, when calculating the group’s partial exemption method.

Further details on when the reverse charge is due can be found in VATPOSS14000.