VGROUPS06050 - VAT groups - protection of the Revenue: Legislative Background

Section 43B(5)

Under the VAT Act 1994, section 43B(5), the Commissioners of HM Revenue & Customs have the powers to:

• refuse applications for group treatment
• refuse applications to include new members in a group
• refuse applications to exclude members from an existing group (we can only refuse such applications if the entity is still eligible to remain in the group)
• refuse applications to change representative members
• refuse applications to disband a group altogether (we can only refuse these applications if all the entities are still eligible to remain grouped)
• where we consider that it is necessary to do so for the protection of the revenue.

Section 43C(1) and 43C(2) of the VATA 1994

These powers allow HM Revenue & Customs to direct that an entity be removed from a VAT group, where it appears that the continued inclusion of the entity presents a threat to the revenue. This power can only be exercised from a current or future date.

Section 43C(3) of the VATA 1994

This power allows HM Revenue & Customs to direct that an entity be excluded from a group, if it has ceased to be eligible to remain in the group. A direction issued under this provision can have effect retrospectively but not earlier than the date when the group member was not eligible or ceased to be eligible.