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Copthorn Holdings and HMRC’s policy on backdating VAT group registration

Rowena Clifton and James Llewellyn (The VAT Consultancy) consider the Copthorn Holdings decision, which raises important questions about HMRC’s approach to its published guidance and how it should be held to account.

A business lost £2m ofnput VAT due to an oversight regarding the members of its VAT group. The issue arose in Copthorn Holdings Ltd [2015] UKFTT 405 (TC) (reported in Tax Journal 16 September 2015) when it erroneously thought it had included two companies in the VAT group and then failed to persuade HMRC to exercise its discretion to add them retrospectively. The case considers whether HMRC’s published guidance on retrospective VAT grouping is too restrictive; and the factors which HMRC should have taken into consideration in arriving at its decision. It also raises wider questions about the fairness of HMRC’s approach...

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