Commentary

RCB/16/11 VAT—reverse charges within VAT groups – legislating a VAT grouping Extra Statutory Concession (ESC 3.2.2)

Part V16 Forms and other HMRC material

RCB/16/11 VAT—reverse charges within VAT groups – legislating a VAT grouping Extra Statutory Concession (ESC 3.2.2)

RCB/16/11 VAT—reverse charges within VAT groups – legislating a VAT grouping Extra Statutory Concession (ESC 3.2.2)

Revenue & Customs Brief, Issue 16. 25 March 2011

1 Introduction

HM Revenue & Customs (HMRC) have a published Extra Statutory Concession (ESC) covering how a tax charge applicable to VAT groups should be calculated (ESC 3.2.2). HMRC is reviewing all its ESCs following the Wilkinson decision (R v HM Commissioners of Inland Revenue ex p Wilkinson [2005] UKHL 30). ESC3.2.2 is not “Wilkinson” compliant. The Government intends to legislate to give statutory effect to ESC 3.2.2. This Brief sets out how the ESC should be applied in the interim.

2 Who needs to read this?

This ESC affects UK VAT groups with an overseas member that buys services from persons outside the VAT group and uses them to make supplies to the UK members.

3 Background

A VAT group comprises two or more corporate bodies under common control within a single VAT registration. A VAT group can contain members that are established overseas provided that they are

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