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Upper Tribunal confirms that right to make VAT repayment claims belongs to representative member of VAT Group

03 January 2017. Published by Michelle Sloane, Partner

In HMRC v MG Rover Group Limited; Standard Chartered PLC v HMRC [2016] UKUT 434, the UT has confirmed that section 43, Value Added Tax Act 1994 (VATA) required repayment rights under section 80, VATA, to be held only by the representative member both before and after they have left the group or the group has been dissolved.


The UT considered two joined appeals, both concerned with VAT groups where the supplying entity had left the VAT group before a claim for overpaid VAT was made under section 80, VATA. 

At first instance, the FTT came to different conclusions in each case.  In the Standard Chartered case, the FTT held that where a company, which was a member of a VAT group and made supplies on which VAT was overpaid, left its VAT group, the right to claim the overpaid VAT remained with the representative VAT group.  In contrast, in the MG Rover case, the FTT held that where a company left its VAT group, it acquired the right to claim the overpaid VAT and that right was withdrawn from the representative member of the VAT Group. 

UT's decision

The UT upheld the conclusion (and reasoning) of the FTT in Standard Chartered, dismissing the appeal against that decision, and allowing the appeal against the decision of the FTT in MG Rover. The UT considered that the right to repayment rested with the representative member of the relevant VAT group even if the supplying company was no longer a VAT group member. The UT said that section 43, VATA had to be interpreted by reference to Article 4(4) of the Sixth VAT Directive which it considered correctly implemented Article 4(4).  The UT considered that the purpose of the VAT grouping arrangements was to simplify the administration of VAT by treating members of the VAT group as a single taxable person rather than taxable persons in their own right. 

The UT noted that any potential unfairness caused by its decision could be resolved through specific contractual terms agreed before the member leaves the VAT group. 


This has been an area of contention for some time and the UT's decision provides some welcome clarification in this complex area.  It is recommended that parties entering into VAT group arrangements ensure contractually that there are mechanisms in place to address the position of VAT claims in the event a member leaves the VAT group.  These mechanisms should be addressed when the VAT group is set up, however, if not, they need to be addressed before a member exits the VAT group to avoid later issues.

A copy of the decision is available to view here: