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17 January 2001
Customs news
VAT groups
Customs have recently announced their intention to use their revenue protection powers in relation to VAT grouping.
VAT groups
Customs have recently announced their intention to use their revenue protection powers in relation to VAT grouping.
Customs news
VAT groups
Customs have recently announced their intention to use their revenue protection powers in relation to VAT grouping.
In particular, Customs are targeting businesses which have adopted structures that enable them to include a supplier and a customer from different organisations in a single VAT group. Typically this is achieved by ensuring that the holding/subsidiary company relationship necessary for VAT grouping is in place between supplier and customer, even though the supplier is in reality run by and for the benefit of an independent third party and that third party provides almost all the investment in the supplier. By adopting these structures, partly exempt customers are able to obtain goods or services without incurring irrecoverable input tax.
Customs consider that such structures result in revenue loss that goes beyond the normal consequences of grouping.
In accordance with the procedures outlined in Business Brief 15/99, Customs will be writing to companies who appear to be involved in such structures to seek further information about the structure and the transactions between the group members, with the aim of deciding whether relevant suppliers should be removed from the VAT group on revenue protection grounds. Similar procedures will be adopted for any application from a supplier to join a VAT group, where membership is dependent on the use of a contrived structure, with the aim of deciding whether the application should be rejected on the grounds of revenue protection.
(Source: Customs Business Brief 01/00 dated 10 January 2001.)
VAT groups
Customs have recently announced their intention to use their revenue protection powers in relation to VAT grouping.
In particular, Customs are targeting businesses which have adopted structures that enable them to include a supplier and a customer from different organisations in a single VAT group. Typically this is achieved by ensuring that the holding/subsidiary company relationship necessary for VAT grouping is in place between supplier and customer, even though the supplier is in reality run by and for the benefit of an independent third party and that third party provides almost all the investment in the supplier. By adopting these structures, partly exempt customers are able to obtain goods or services without incurring irrecoverable input tax.
Customs consider that such structures result in revenue loss that goes beyond the normal consequences of grouping.
In accordance with the procedures outlined in Business Brief 15/99, Customs will be writing to companies who appear to be involved in such structures to seek further information about the structure and the transactions between the group members, with the aim of deciding whether relevant suppliers should be removed from the VAT group on revenue protection grounds. Similar procedures will be adopted for any application from a supplier to join a VAT group, where membership is dependent on the use of a contrived structure, with the aim of deciding whether the application should be rejected on the grounds of revenue protection.
(Source: Customs Business Brief 01/00 dated 10 January 2001.)
