(1)Where under the following provisions of this section any bodies corporate are treated as members of a group, any business carried on by a member of the group shall be treated as carried on by the representative member, and—
(a)any supply of goods or services by a member of the group to another member of the group shall be disregarded; and
(b)any [F1supply which is a supply to which paragraph (a) above does not apply and is a supply] of goods or services by or to a member of the group shall be treated as a supply by or to the representative member; and
(c)any VAT paid or payable by a member of the group on the acquisition of goods from another member State or on the importation of goods from a place outside the member States shall be treated as paid or payable by the representative member and the goods shall be treated—
(i)in the case of goods acquired from another member State, for the purposes of section 73(7); and
(ii)in the case of goods imported from a place outside the member States, for those purposes and the purposes of section 38,
as acquired or, as the case may be, imported by the representative member;
and all members of the group shall be liable jointly and severally for any VAT due from the representative member.
[F2(1AA)Where—
(a)it is material, for the purposes of any provision made by or under this Act (“the relevant provision”), whether the person by or to whom a supply is made, or the person by whom goods are acquired or imported, is a person of a particular description,
(b)paragraph (b) or (c) of subsection (1) above applies to any supply, acquisition or importation, and
(c)there is a difference that would be material for the purposes of the relevant provision between—
(i)the description applicable to the representative member, and
(ii)the description applicable to the body which (apart from this section) would be regarded for the purposes of this Act as making the supply, acquisition or importation or, as the case may be, as being the person to whom the supply is made,
the relevant provision shall have effect in relation to that supply, acquisition or importation as if the only description applicable to the representative member were the description in fact applicable to that body.
(1AB)Subsection (1AA) above does not apply to the extent that what is material for the purposes of the relevant provision is whether a person is a taxable person.]
(1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)An order under section 5(5) or (6) may make provision for securing that any goods or services which, if all the members of the group were one person, would fall to be treated under that section as supplied to and by that person, are treated as supplied to and by the representative member.
[F3(2A)A supply made by a member of a group (“the supplier”) to another member of the group (“the UK member”) shall not be disregarded under subsection (1)(a) above if—
(a)it would (if there were no group) be a supply of services falling within Schedule 5 to a person belonging in the United Kingdom;
(b)those services are not within any of the descriptions specified in Schedule 9;
(c)the supplier has been supplied (whether or not by a person belonging in the United Kingdom) with services falling within any of paragraphs 1 to 8 of Schedule 5;
(d)the supplier belonged outside the United Kingdom when it was supplied with the services mentioned in paragraph (c) above; and
(e)the services so mentioned have been used by the supplier for making the supply to the UK member.
(2B)Subject to subsection (2C) below, where a supply is excluded by virtue of subsection (2A) above from the supplies that are disregarded in pursuance of subsection (1)(a) above, all the same consequences shall follow under this Act as if that supply—
(a)were a taxable supply in the United Kingdom by the representative member to itself, and
(b)without prejudice to that, were made by the representative member in the course or furtherance of its business.
(2C)A supply which is deemed by virtue of subsection (2B) above to be a supply by the representative member to itself—
(a)shall not be taken into account as a supply made by the representative member when determining any allowance of input tax under section 26(1) in the case of the representative member;
(b)shall be deemed for the purposes of paragraph 1 of Schedule 6 to be a supply in the case of which the person making the supply and the person supplied are connected within the meaning of section 839 of the Taxes Act (connected persons); and
(c)subject to paragraph (b) above, shall be taken to be a supply the value and time of which are determined as if it were a supply of services which is treated by virtue of section 8 as made by the person by whom the services are received.
(2D)For the purposes of subsection (2A) above where—
(a)there has been a supply of the assets of a business of a person (“the transferor”) to a person to whom the whole or any part of that business was transferred as a going concern (“the transferee”),
(b)that supply is either—
(i)a supply falling to be treated, in accordance with an order under section 5(3), as being neither a supply of goods nor a supply of services, or
(ii)a supply that would have fallen to be so treated if it had taken place in the United Kingdom,
and
(c)the transferor was supplied with services falling within paragraphs 1 to 8 of Schedule 5 at a time before the transfer when the transferor belonged outside the United Kingdom,
those services, so far as they are used by the transferee for making any supply falling within that Schedule, shall be deemed to have been supplied to the transferee at a time when the transferee belonged outside the United Kingdom.
(2E)Where, in the case of a supply of assets falling within paragraphs (a) and (b) of subsection (2D) above—
(a)the transferor himself acquired any of the assets in question by way of a previous supply of assets falling within those paragraphs, and
(b)there are services falling within paragraphs 1 to 8 of Schedule 5 which, if used by the transferor for making supplies falling within that Schedule, would be deemed by virtue of that subsection to have been supplied to the transferor at a time when he belonged outside the United Kingdom,
that subsection shall have effect, notwithstanding that the services have not been so used by the transferor, as if the transferor were a person to whom those services were supplied and as if he were a person belonging outside the United Kingdom at the time of their deemed supply to him; and this subsection shall apply accordingly through any number of successive supplies of assets falling within paragraphs (a) and (b) of that subsection.]
(3)Two or more bodies corporate are eligible to be treated as members of a group if each is resident or has an established place of business in the United Kingdom and—
(a)one of them controls each of the others; or
(b)one person (whether a body corporate or an individual) controls all of them; or
(c)two or more individuals carrying on a business in partnership control all of them.
(4)Where an application to that effect is made to the Commissioners with respect to two or more bodies corporate eligible to be treated as members of a group, then, from the beginning of a prescribed accounting period they shall be so treated, and one of them shall be the representative member, unless the Commissioners refuse the application; but they shall not refuse it unless it appears to them necessary to do so for the protection of the revenue.
(5)Where any bodies corporate are treated as members of a group and an application to that effect is made to the Commissioners, then, from the beginning of a prescribed accounting period—
(a)a further body eligible to be so treated shall be included among the bodies so treated; or
(b)a body corporate shall be excluded from the bodies so treated; or
(c)another member of the group shall be substituted as the representative member; or
(d)the bodies corporate shall no longer be treated as members of a group,
[F4unless the Commissioners refuse the application under subsection (5A) below.].
[F5(5A)If it appears to the Commissioners necessary to do so for the protection of the revenue, they may—
(a)refuse any application made to the effect mentioned in paragraph (a) or (c) of subsection (5) above; or
(b)refuse any application made to the effect mentioned in paragraph (b) or (d) of that subsection in a case that does not appear to them to fall within subsection (6) below.]
(6)Where a body corporate is treated as a member of a group as being controlled by any person and it appears to the Commissioners that it has ceased to be so controlled, they shall, by notice given to that person, terminate that treatment from such date as may be specified in the notice.
(7)An application under this section with respect to any bodies corporate must be made by one of those bodies or by the person controlling them and must be made not less than 90 days before the date from which it is to take effect, or at such later time as the Commissioners may allow.
(8)For the purposes of this section a body corporate shall be taken to control another body corporate if it is empowered by statute to control that body’s activities or if it is that body’s holding company within the meaning of section 736 of the M1Companies Act 1985; and an individual or individuals shall be taken to control a body corporate if he or they, were he or they a company, would be that body’s holding company within the meaning of that Act.
[F6(9)Schedule 9A (which makes provision for ensuring that this section is not used for tax avoidance) shall have effect.]
Textual Amendments
F1Words in s. 43(1)(b) substituted (1.5.1995 with effect as mentioned in s. 25(5) of the amending Act) by 1995 c. 4, s. 25(2)(5)
F2S. 43(1AA)(1AB) inserted (with effect in relation to any supply made after 26.11.1996 and in relation to any acquisition or importation taking place after that date) by 1997 c. 16, s. 40(1)(3)
F3S. 43(2A)-(2E) inserted (with effect in relation to supplies made on or after 26.11.1996) by 1997 c. 16, s. 41(1)(2)
F4Words in s. 43(5) after para. (d) substituted (1.5.1995 with effect as mentioned in s. 25(5) of the amending Act) by 1995 c. 4, s. 25(3)(5)
F5S. 43(5A) inserted (1.5.1995 with effect as mentioned in s. 25(5) of the amending Act) by 1995 c. 4, s. 25(4)(5)
Marginal Citations