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Characterisation of supplies made to persons outside a VAT group

This paragraph examines the implications that follow once a VAT group has been formed.

Group registration does not affect the characterisation of supplies by a group member to persons outside the group. This was seen, for example in Canary Wharf Ltd¹ where the supply of services relating to a building by a group member to a third party was standard rated despite the fact that another group member made exempt supplies in relation to the same building.

Nor does group registration affect input tax recovery on supplies received by a group member before its inclusion in the group, unless the right to recover input tax has been assigned to the representative member. In Chubb Ltd the representative member of a VAT group was held not to be able to recover input tax attributable to a share issue by a company which had been a member of the VAT group but had since gone into liquidation. The decision was reached on the basis that the VAT