On 19 October 2016, the Upper Tribunal held8 that the right to make a claim for overpaid VAT under section 80 VATA 1994 remains with the representative member of a VAT group, even where the entity making the supply has left the VAT group.

The Upper Tribunal heard two joined appeals, resulting from apparently conflicting (differently constituted) First-tier Tribunal (FTT) decisions based on similar factual circumstances:

• in the first case (MG Rover Ltd), the FTT held that the UK VAT grouping rules, which deem all supplies made by group members to be made by the representative member, should not continue once the close economic link between group members has ended. Whilst a company remained part of a VAT group, the right to recover overpaid VAT on its supplies lay with the representative member. Once that member left the VAT group, the right to recover went with the departing member (or passed to the “new” representative member) if a new VAT group is joined. The FTT in this case rejected the argument that the deeming effect of the VAT grouping rules must continue until the group ceased to exist (regardless of the make-up of the group)

• in the second case (Standard Chartered) the FTT decided that the representative member of a VAT group embodied the “single taxable person” for VAT purposes. Provided that the group registration continued, rights of a representative member passed to a successor representative member.

The Upper Tribunal agreed with the FTT decision in the Standard Chartered case. In the Tribunal’s view, the right to recovery of overpaid VAT remained with the representative member of the VAT group even in cases where the relevant VAT group member had subsequently left the VAT group.

The decision can be viewed here.