SPEED READ VAT groups allow entities connected legally and economically to form a single taxable person. This is not just an administrative measure, as banks and insurance companies in the VAT-exempt sector also benefit from neutrality, a primary objective of the VAT system. Transactions within a VAT group are mostly de-supplied, so preventing the build up of additional irrecoverable VAT relating to staff and other overheads which may otherwise occur. The Commission consider the UK implementation of the VAT group mechanism as too wide, but the case law is already clear on the meaning of taxable persons. Any further tightening of the rules must be proportionate, ie, suitable and necessary. In the writers’ view, the ‘legal personality’ principle set out by the ECJ in FCE Bank and ECU Italy will continue to trump the VAT group personality doctrine.
