Cross-border VAT grouping amendment 

The measure

In the CJEU judgment in Skandia America Corp (C-7/13), the CJEU considered the cross-border VAT group treatment of supplies between head offices and their respective branches which were established in different jurisdictions. In summary, the CJEU stated that businesses with head offices or branches in jurisdictions that applied Skandia were required to treat certain intra-entity supplies as taxable for VAT purposes. Since that judgment HMRC have issued a number of Revenue and Customs Briefs providing further information on HMRC’s position.  

The announcement at Budget 2025 and the published Revenue and Customs Brief 7 (2025) supersede all previous Revenue and Customs Briefs, and confirm that the UK does not apply the Skandia judgment. Any intra-entity supplies will not be a supply for UK VAT purposes.  

Where businesses relied on previous HRMC guidance and applied the reverse charge on intra-entity supplies, they may submit a Notice of Error Correction to reclaim overpaid VAT. 

Who will be affected?

Businesses making intra-entity supplies between UK establishments and overseas establishments that belong to a VAT group in EU countries that apply Skandia.

When will the measure come into effect?

Effective immediately.