The emergence of a ‘new’ fixed establishment threshold for VAT grouping: insights from Barclays

It is widely recognised that UK VAT grouping rules are ‘business friendly’ due to the whole establishment concept which allows for overseas entities to join a VAT group through the prism of a UK fixed establishment (or branch). By contrast most EU VAT groups recognise the establishment only concept whereby overseas entities are not allowed to join a domestic VAT group. However in recent years HMRC seem to have seriously reconsidered the UK approach by developing lines of arguments which effectively seek to directly or indirectly apply the so-called Skandia doctrine. This was apparent in the decision issued by the First-tier Tribunal on 29 August 2024 in the Barclays case in which the judge agreed with HMRC that an offshore group entity did not meet the requirements to have a fixed establishment for UK grouping purposes. Sadly for taxpayers this judgment read in conjunction...