3 November 2014

Surprisingly, in Revenue & Customs Brief 34/2014, HMRC has suggested it may not see a VAT group as a separate taxable person since the grouping rules in Sweden and in the UK are different. For the moment, HMRC has suggested that its current policy must be followed. This may mean that the advantages offered by the judgment may be denied by HMRC, although it would still be sensible to make a claim so as to avoid an issue under the four year cap.
In the view of FiscalReps the treatment of a VAT group as a separate taxable person must be consistent across the EU, or there will be double or non-taxation. Therefore it is likely that HMRC will have to change its policy in due course. There will still be issues arising from mismatches between member states, however, as Sweden for example will be applying the ruling retrospectively (and in some cases it always has) whilst other member states will apply it from a current date. In its announcement HMRC has not confirmed it will apply any change from a future date, but this is normally the way such policy changes are dealt with.