Commentary

BB/15/99 VAT groups—protection of the revenue

Part V16 Forms and other HMRC material

BB/15/99 VAT groups—protection of the revenue

BB/15/99 VAT groups—protection of the revenue

Business Brief, Issue 15. 12 July 1999

In the 1999 Budget, changes to the VAT grouping rules were announced. This included a new revenue protection power. This Business Brief sets out our approach to this new power, and to our use of existing revenue protection powers contained in the grouping legislation.

Background

The VAT grouping facility was introduced with the tax in 1973 and has always contained powers to refuse certain applications for grouping, for the protection of the revenue. Over the years those powers have been amended so that, prior to the 1999 Budget, we were able to refuse applications for—

  1.  

    —     a new VAT group to be formed;

  2.  

    —     a company to be added to an existing VAT group;

  3.  

    —     a company to be removed from an existing VAT group;

  4.  

    —     the representative member of a VAT group to be changed; and

  5.  

    —     a VAT group to be disbanded.

1999 Budget changes

There were two changes in this area announced in the Budget. They will come into force on Royal Assent. These are that—

  1.  

    —     grouping applications will be given immediate provisional effect from the date that we receive them. We will then have 90 days from the receipt of an application to decide whether to refuse the application for the protection of the revenue; and

  2.  

    —     we will be able to remove a company from an existing VAT group for the protection of the revenue. This power is not subject

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