On 25 June 2019, the First-tier Tribunal held2 that the grouping rules in the Value Added Tax Act 1994 (VATA) could be interpreted to allow a Scottish Partnership to form a VAT group with the companies it owned.

Although not a “body corporate” the partnership could, in the Tribunal’s view, form a VAT group with the companies that it controlled through the possession of voting rights. The Tribunal considered that it was able to arrive at a statutory construction of section 43A of the VATA that is in conformity with EU law3.

As the VAT grouping rules are to be amended by Finance Act 2019, the implications of this decision are likely to be limited to outstanding VAT group applications with similar fact patterns (namely, a partnership having control of bodies corporate).

The decision can be viewed here.