Jurisdiction(s):
United Kingdom

Prudential Assurance v HMRC: Court of Appeal—time of supply for continuous services prevails over VAT group disregard; post‑group‑exit invoices are taxable (UK VAT)

Published on: 06 June 2024

Published by a LexisNexis Tax expert

Legal News

Article summary

The Prudential Assurance Company Ltd v Revenue and Customs Commissioners [2024] EWCA Civ 300

What are the practical implications of this case?

Section 43 of the Value Added Tax Act 1994 stipulates that dealings between entities within the same VAT group are to be disregarded, and any supply by a member is treated as made by the representative member. Regulation 90 of the VAT Regulations 1995, SI 1995/2518, provides that continuous supplies are regarded as made at the time an invoice is issued or payment is received, whichever occurs earlier. The point arising in this appeal is which provision takes priority. Put simply, the dispute concerns which of these VAT rules governs in priority here. In the absence of a Supreme Court ruling resolving the interaction of these two provisions, the Court of Appeal’s judgment cautions suppliers about the consequences to weigh when deciding to leave a VAT group, and about the timing of that change. The ruling underlines the risk to a supplier of ongoing services who exits a VAT group and then becomes chargeable to VAT once the parties are no longer within the same VAT group.

What was the background?

Silverfleet Capital Ltd (the Supplier) supplied...

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