Weekly VAT News

VAT Notice 700/2: Group and divisional registration – amended

HMRC have amended section 4.1 of VAT Notice 700/2 on group and divisional registration. HMRC have the power to prevent a person joining a VAT group or to remove a person from a VAT group when HMRC consider that necessary for the protection of revenue. HMRC will not usually use protection of revenue powers “if the revenue loss follows from the normal operation of grouping”. Section 4.1 has been amended with respect to when HMRC will consider using their protection of revenue powers if they are of the view that the revenue loss does not follow the normal operation of grouping, such as, where HMRC “identify enhanced risks to the collection of revenue” and “the use of VAT avoidance and distortion in the liability of the group’s supplies”. (Contact: Andrew Clarke)

Advance tax certainty for major investment projects

At Budget 2025, the government issued a response to the consultation on advance tax certainty for major projects, a new HMRC service intended to provide major investment projects with certainty in advance as to how tax would apply. While open to considering other taxes, the consultation focused on corporation tax as the core tax on which clearances could be sought. Following the consultation process, the government has now decided that a wider range of taxes, including VAT, will be included. The legislation for the introduction of the service is included in Finance (No. 2) Bill 2024-26, and it is intended that the service will be available from July 2026. HMRC have now issued Advance tax certainty service: draft guidance, setting out how the service will work, who can apply, the financial threshold, the taxes covered, and the application process. The threshold for entry into the process is £1 billion of qualifying project expenditure in the UK over the lifetime of the project. Clearances will be available in the following areas where they are material to the investment project: corporation tax, VAT, stamp duty land tax, income tax, PAYE regulations, and the construction industry scheme. A clearance will bind HMRC for up to five years, and may be renewed, provided there was full initial disclosure of all material facts and subject to any material change in the relevant statute or case law. HMRC state that the guidance is subject to change, in line with the parliamentary process of the Finance Bill, and that it will be finalised ahead of the formal launch of the service. (Contact: Donna Huggard)

Moving goods into Northern Ireland from Great Britain – ICS2

From 1 January 2026, road and rail carriers moving goods into Northern Ireland or the EU from Great Britain must use Import Control System 2 (ICS2) to submit safety and security entry summary declarations (ENS). ICS2 replaces the Import Control System Northern Ireland (ICSNI), and Import Control System 1 (ICS1) for goods entering the EU. Those using the Trader Support Service (TSS) to submit declarations can continue to do so, and do not need to register to use ICS2. For information on ICS2, see Make an entry summary declaration using the Import Control System 2. (Contact: Donna Hemphill)

VAT case calendar

On 17 December, the Supreme Court will hand down judgment in Hotel La Tour Ltd on VAT recovery on fundraising share costs.