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HMRC internal manual

VAT Groups

From
HM Revenue & Customs
Updated
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VAT avoidance - groups of companies statement of practice on the new Schedule 9A VATA 1994: conditions for the issue of a direction under the new Schedule 9A: relevant event

A relevant event is defined (Schedule 9A, paragraph 1(2)) as occurring when a company joins or leaves a VAT group registration, or when it enters into any transaction. The word “transaction” is capable of being given a very wide meaning when considered in isolation, but the key to understanding how Customs will interpret this in the context of the provisions is that a relevant event occurs when a taxpayer enters into a transaction. Generally Customs will take this to mean when the taxpayer enters into a contract or other disposition, such as a gift.

Example:

Take a lease of a building. Each payment of rent could be regarded as a transaction in itself. However, the mere payment of rent would not be regarded as covered by the term “enters into any transaction” as used in the legislation.

Customs will regard the entering into of the lease by the landlord or tenant as a relevant event, which would (if the other conditions are met), potentially bring a company within the scope of the provisions. Other examples falling within the scope of the provisions are an agreement for a lease, an assignment, variation or surrender. The performance of obligations under the lease, (e.g. the carrying out of repairs or the payment of rent), would not normally be caught unless, exceptionally, such obligation constituted the entering into of a separate contract.