VAT: Groups/agencies
Page 33
If you've noticed an error in this article please click here to report it so we can fix it.
VAT groups Customs & Excise is consulting* on changes to the VAT group treatment provisions to ensure that the group treatment facility is restricted to fully taxable corporate bodies. This means corporate bodies would not be able to form, join or remain in a VAT group if they: • Are involved in any activities (above a specified level) of a type exempted by the VAT Act 1994, Schedule 9 (this would include any intra-group transactions); • Have neither a liability nor entitlement to register for VAT in the UK (under the VAT Act 1994, Schedules 1,2 or 3).
* Available from Marco Crisp, HM Customs & Excise, VAT Policy Directorate, Collection Division, Registration Branch, 4th Floor SW, Queens Dock, Liverpool, Merseyside, L74 4AA; e-mail, http://www.open.govalk/customs/c&ehome.htm. Comments should be sent to Crisp by 30 September 1998.
Agencies Following recent case decisions, Customs and Excise has clarified the circumstances in which an overseas business will be taken to have a UK fixed establishment through an agency.
To be treated as a UK fixed establishment, a UK subsidiary, associate of an overseas business, or a UK business unrelated to the overseas business must: • Be of a specified minimum size with the permanent human and technical resources necessary for providing or receiving services; • Not be operating, either in function or substance, independently of the overseas business; • Actually supply (or receive) the service. The VAT implications of this are explained in Notice 741 VAT: Place of Supply of Services.
Companies which are not sure if they are making or receiving supplies through such agencies should seek advice from their local VAT Business Advice Centres.