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HMRC internal manual

VAT Groups

VAT groups - protection of the Revenue: background

Section 43B(5)

Under the VAT Act 1994, section 43B(5), the Commissioners of HM Revenue & Customs have the powers to:

  • refuse applications for group treatment
  • refuse applications to include new members in a group
  • refuse applications to exclude members from an existing group (we can only refuse such applications if the company is still eligible to remain in the group)
  • refuse applications to change representative members
  • refuse applications to disband a group altogether (we can only refuse these applications if all the companies are still eligible to remain grouped),

where we consider that it is necessary to do so for the protection of the revenue.

Section 43C(1) and 43C(2) of the VATA 1994

These powers allow Customs to direct that a company be removed from a VAT group, where it appears that the continued inclusion of the company presents a threat to the revenue. This power can only be exercised from a current or future date.

Section 43C(3) of the VATA 1994

This power allows HM Revenue & Customs to direct that a company be excluded from a group, if it has ceased to be eligible to remain in the group. A direction issued under this provision can have effect retrospectively but not earlier than the date when the group member was not eligible or ceased to be eligible.