HMRC has issued a consultation seeking views on whether to make changes to UK VAT grouping following the Court of Justice of the European Union’s (CJEU) decisions in Beteiligungsgesellschaft Larentia + Minerva mbH & Co KG v Finanzamt Nordenham (C-108/14) and Skandia America Corp (USA) v Skatteverket (C-7/13). The main focus of the consultation is to review options around eligibility requirements for VAT group registration and the impact of policy changes following the decision in Skandia.

The CJEU in Lirentia and Minerva, indicated that a member state may not restrict VAT grouping to those entities which have legal personality, unless it is justified to prevent abuses, tax evasion or avoidance. HMRC recognises that one reading of this judgment is that member states may have to extend VAT grouping to a wider range of entities. Accordingly, HMRC are seeking views on the risks and opportunities for businesses if VAT grouping is widened to other entities, such as partnerships. In Skandia, the CJEU found Sweden’s establishment only VAT grouping was consistent with Article 11 of the VAT Directive, and resulted in taxable supplies from the corporation’s overseas head office to its Swedish branch in the VAT group. Following the CJEU decision, HMRC put in place steps to recognise separate taxable persons created by establishment only VAT groups in other member states. HMRC is seeking views on how the policy changes have impacted businesses.

The closing dates for comments are 27 February 2017.

A copy of the consultation can be found here.