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UK VAT grouping disputes: implications of the HSBC decision

The Upper Tribunal recently considered key points of principle relating to the interpretation of the UK’s VAT grouping rules in HSBC Electronic Data Processing (Guangdong) Ltd & others v HMRC. In particular, the UT held that each body corporate eligible for VAT group membership must itself be ‘established’ in the UK and the test of ‘establishment’ should be informed by that used in the place of supply rules and also held that HMRC’s power to terminate VAT group membership where ‘necessary for the protection of the revenue’ is not limited to abusive scenarios.

Sarah Bond from our London tax team discusses the issues addressed in this decision in the briefing at the link below and considers that the decision may make it harder to establish VAT grouping of UK branches with limited resources in the UK to provide group services and further the decision that HMRC’s protection of the revenue powers can be exercised in the absence of any abusive practice may make it easier for HMRC to defend decisions to terminate VAT group membership. 

UK VAT grouping disputes - implications of the HSBC decision
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