Value Added Tax Act 1994, section 43

Groups of companies

Part III Application of Act in particular cases

(1)Where under [F351sections 43A to 43DF351] any [F352personsF352] are treated as members of a group, any business carried on by a member of the group shall be treated as carried on by the representative member, and—

(a)any supply of goods or services by a member of the group to another member of the group shall be disregarded; and

(b)any [F353supply which is a supply to which paragraph (a) above does not apply and is a supplyF353] of goods or services by or to a member of the group shall be treated as a supply by or to the representative member; and

[F354 (c)any VAT paid or payable by a member of the group on the importation of goods shall be treated as paid or payable by the representative member and the goods shall be treated, for the purposes of sections 38 and 73(7), as imported by the representative member;F354]

and all members of the group shall be liable jointly and severally for any VAT due from the representative member.

[F355 (1AA)Where—

(a) it is material, for the purposes of any provision made by or under this Act (“the relevant provision”), whether the person by or to whom a supply is made, or the person by whom goods are F356 ... imported, is a person of a particular description,

(b)paragraph (b) or (c) of subsection (1) above applies to any supplyF357... or importation, and

(c)there is a difference that would be material for the purposes of the relevant provision between—

(i)the description applicable to the representative member, and

(ii)the description applicable to the [F358 person whoF358] (apart from this section) would be regarded for the purposes of this Act as making the supplyF359... or importation or, as the case may be, as being the person to whom the supply is made,

the relevant provision shall have effect in relation to that supplyF360... or importation as if the only description applicable to the representative member were the description in fact applicable to that [F361 personF361] .

(1AB)Subsection (1AA) above does not apply to the extent that what is material for the purposes of the relevant provision is whether a person is a taxable person.F355]

(1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)An order under section 5(5) or (6) may make provision for securing that any goods or services which, if all the members of the group were one person, would fall to be treated under that section as supplied to and by that person, are treated as supplied to and by the representative member [F362and may provide for that purpose that the representative member is to be treated as a person of such description as may be determined under the order.F362] .

[F363 (2A) A supply made by a member of a group (“the supplier”) to another member of the group (“the UK member”) shall not be disregarded under subsection (1)(a) above if—

(a)it would (if there were no group) be a supply of services [F364 to which section 7A(2)(a) applies madeF364] to a person belonging in the United Kingdom;

(b)those services are not within any of the descriptions specified in [F365 Part 2 of Schedule 9 or are within any of the descriptions specified in Part 3 of that ScheduleF365] ;

(c)the supplier has been supplied (whether or not by a person belonging in the United Kingdom) with [F366 any services F367... which do not fall within any of the descriptions specified in [F368 Part 2 of Schedule 9 or which do fall within any of the descriptions specified in Part 3 of that ScheduleF368] [F369 and section 7A(2)(a) applied to the supplyF369] ;F366]

(d)the supplier belonged outside the United Kingdom when it was supplied with the services mentioned in paragraph (c) above; and

(e)the services so mentioned have been used by the supplier for making the supply to the dfnUK member.

(2B)Subject to subsection (2C) below, where a supply is excluded by virtue of subsection (2A) above from the supplies that are disregarded in pursuance of subsection (1)(a) above, all the same consequences shall follow under this Act as if that supply—

(a)were a taxable supply in the United Kingdom by the representative member to itself, and

(b)without prejudice to that, were made by the representative member in the course or furtherance of its business.

(2C)[F370 Except in so far as the Commissioners may by regulations otherwise provide,F370] a supply which is deemed by virtue of subsection (2B) above to be a supply by the representative member to itself—

(a)shall not be taken into account as a supply made by the representative member when determining any allowance of input tax under section 26(1) in the case of the representative member;

(b)shall be deemed for the purposes of paragraph 1 of Schedule 6 to be a supply in the case of which the person making the supply and the person supplied are connected within the meaning of [F371 section 1122 of the Corporation Tax Act 2010F371] (connected persons); and

(c)subject to paragraph (b) above [F372 and paragraph 8A of Schedule 6F372] , shall be taken to be a supply the value and time of which are determined as if it were a supply of services which is treated by virtue of section 8 as made by the person by whom the services are received.

(2D)For the purposes of subsection (2A) above where—

(a) there has been a supply of the assets of a business of a person (“the transferor”) to a person to whom the whole or any part of that business was transferred as a going concern (“the transferee”),

(b)that supply is either—

(i)a supply falling to be treated, in accordance with an order under section 5(3), as being neither a supply of goods nor a supply of services, or

(ii)a supply that would have fallen to be so treated if it had taken place in the United Kingdom,

and

(c)the transferor was supplied with services F373... at a time before the transfer when the transferor belonged outside the United Kingdom [F374 and section 7A(2)(a) applied to the supplyF374] ,

those services, so far as they are used by the transferee for making any supply [F375 to which section 7A(2)(a) applies,F375] shall be deemed to have been supplied to the transferee at a time when the transferee belonged outside the United Kingdom.

(2E)Where, in the case of a supply of assets falling within paragraphs (a) and (b) of subsection (2D) above—

(a)the transferor himself acquired any of the assets in question by way of a previous supply of assets falling within those paragraphs, and

(b)[F376 there is a supply to which section 7A(2)(a) applies of services which, if used by the transferor for making such a supply,F376] would be deemed by virtue of that subsection to have been supplied to the transferor at a time when he belonged outside the United Kingdom,

that subsection shall have effect, notwithstanding that the services have not been so used by the transferor, as if the transferor were a person to whom those services were supplied and as if he were a person belonging outside the United Kingdom at the time of their deemed supply to him; and this subsection shall apply accordingly through any number of successive supplies of assets falling within paragraphs (a) and (b) of that subsection.F363]

F377(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F378(5A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F379 (9)Schedule 9A (which makes provision for ensuring that this section is not used for tax avoidance) shall have effect.F379]

Definitions used in section 43 13

business

(1) In this Act “business” includes any trade, profession or vocation.

Defined in s.94(1) · see it in the full Act
VAT

“VAT” means value added tax charged in accordance with this Act;

Defined in s.96(1) · see it in the full Act
subsection (1) above

(a) the reference in subsection (2) to “subsection (1) above” were to “subsection (1) and paragraph 24(1) of Schedule 9ZA”;

Defined in Sch.9ZA para.24(2) · see it in the full Act

(b) the reference in subsection (2A) to “subsection (1) above” were to “subsection (1) or paragraph 24(1) of Schedule 9ZA”.

Defined in Sch.9ZA para.24(2) · see it in the full Act
taxable person

“taxable person” means a person who is a taxable person under section 3;

Defined in s.96(1) · see it in the full Act
supplied

(3) In sub-paragraph (2), “supplied” is to be construed in accordance with Part 1 of the Electricity Act 1989 (see section 64(1) of that Act ).

Defined in Sch.7A para.A1 · see it in the full Act

(3) In sub-paragraph (2), “supplied” is to be construed in accordance with Part 1 of the Electricity Act 1989 (see section 64(1) of that Act ).

Defined in Sch.8 para.3 · see it in the full Act
the supplier

(b) the goods are removed in the course or furtherance of that business by or under the directions of the person carrying on that business (“the supplier”),

Defined in Sch.9ZA para.57(1) · see it in the full Act
taxable supply

“taxable supply” has the meaning given by section 4(2);

Defined in s.96(1) · see it in the full Act
the Commissioners

“the Commissioners” means the Commissioners of Customs and Excise;

Defined in s.96(1) · see it in the full Act
regulations

“regulations” means regulations made by the Commissioners under this Act;

Defined in s.96(1) · see it in the full Act
input tax

“input tax” has the meaning given by section 24;

Defined in s.96(1) · see it in the full Act
connected

(a) a person is “connected” with a director if that person is the director's spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the director or of the director's spouse or civil partner;

Defined in Sch.9ZB para.17(8) · see it in the full Act

(5) Section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies for the purpose of determining whether a person is connected with another for the purposes of this paragraph.

Defined in Sch.9ZA para.9(5) · see it in the full Act

(a) a person is “connected” with a director if that person is the director's spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the director or of the director's spouse or civil partner;

Defined in s.18A(4A) · see it in the full Act
the transferor

(a) there is a supply of any of the assets of a business of a person (“the transferor”) to a person to whom the whole or any part of that business is transferred as a going concern (“the transferee”), and

Defined in Sch.9A para.1(6) · see it in the full Act
the transferee

(a) there is a supply of any of the assets of a business of a person (“the transferor”) to a person to whom the whole or any part of that business is transferred as a going concern (“the transferee”), and

Defined in Sch.9A para.1(6) · see it in the full Act

Cases considering section 43 17

Commissioners for His Majesty's Revenue and Customs v Hotel La Tour Ltd

[2025] UKSC 46 · 17 December 2025Limits

Section 43 implements the VAT-group option. Its statutory fiction simplifies collection but does not erase group members’ identities or the economic activity occurring between them (see paras [115]-[124]). The requirement to disregard an intra-group supply does not make the underlying management activity disappear when characterising the later share disposal. It does not confer exemption or relief (see paras [115]-[117]; [123]-[124]).

The Prudential Assurance Company Ltd v Commissioners for His Majesty’s Revenue and Customs

[2025] UKSC 34 · 11 September 2025Interprets

Attributes a VAT group’s business and external supplies to its representative member. It does not constitute a complete code or contain an independent time-of-supply rule. (see paras [26]; [75]–[77]) An intra-group supply is disregarded only where the applicable time-of-supply rules place the chargeable event while supplier and recipient are group members. The success-fee supplies occurred after the supplier left the group and were not disregarded. (see paras [73]–[79]; [152]–[156])

Commissioners for Her Majesty’s Revenue and Customs v Taylor Clark Leisure Plc

[2018] UKSC 35 · 11 July 2018Interprets

The subsection makes the representative member the United Kingdom embodiment of the single taxable person. It treats every group member’s business and external supplies as those of the representative member, disregards intra-group supplies and imposes joint and several liability for VAT due (see paras [20]-[24]; [26]-[31]).

What each judgment says about section 43 is in the case-law panel in the full Act.

Amendments and notes

29 notes from legislation.gov.uk

Amendments

  1. F351Words in s. 43(1) substituted (22.7.2004) by Finance Act 2004 (c. 12), s. 20(3)
  2. F352Word in s. 43(1) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 5(2); S.I. 2019/1348, reg. 2
  3. F353Words in s. 43(1)(b) substituted (1.5.1995 with effect as mentioned in s. 25(5) of the amending Act) by 1995 c. 4, s. 25(2)(5)
  4. F354S. 43(1)(c) substituted (31.12.2020) by Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 46(2) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  5. F355S. 43(1AA)(1AB) inserted (with effect in relation to any supply made after 26.11.1996 and in relation to any acquisition or importation taking place after that date) by 1997 c. 16, s. 40(1)(3)
  6. F356Words in s. 43(1AA)(a) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 46(3)(a) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  7. F357Word in s. 43(1AA)(b) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 46(3)(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  8. F358Words in s. 43(1AA)(c)(ii) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 5(3)(a); S.I. 2019/1348, reg. 2
  9. F359Word in s. 43(1AA)(c)(ii) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 46(3)(c) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  10. F360Word in s. 43(1AA) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 46(3)(d) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  11. F361Word in s. 43(1AA) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 5(3)(b); S.I. 2019/1348, reg. 2
  12. F362Words in s. 43(2) inserted (19.3.1997) by 1997 c. 16, s. 40(2)
  13. F363S. 43(2A)-(2E) inserted (with effect in relation to supplies made on or after 26.11.1996) by 1997 c. 16, s. 41(1)(2)
  14. F364Words in s. 43(2A)(a) substituted (with effect in accordance with Sch. 36 para. 14(3) of the amending Act) by Finance Act 2009 (c. 10), Sch. 36 paras. 7(2)(a), 14(2) (with Sch. 36 paras. 14(2), 19)
  15. F365Words in s. 43(2A)(b) substituted (with effect in accordance with s. 49 of the amending Act) by Finance Act 2025 (c. 8), ss. 47(5)(a), 49
  16. F366Words in s. 43(2A) substituted (19.3.1997) by 1997 c. 16, s. 41(3)(4)
  17. F367Words in s. 43(2A)(c) omitted (with effect in accordance with Sch. 36 para. 14(3) of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 36 paras. 7(2)(b)(i), 14(2) (with Sch. 36 paras. 14(2), 19)
  18. F368Words in s. 43(2A)(c) substituted (with effect in accordance with s. 49 of the amending Act) by Finance Act 2025 (c. 8), ss. 47(5)(b), 49
  19. F369Words in s. 43(2A)(c) inserted (with effect in accordance with Sch. 36 para. 14(3) of the amending Act) by Finance Act 2009 (c. 10), Sch. 36 paras. 7(2)(b)(ii), 14(2) (with Sch. 36 paras. 14(2), 19)
  20. F370Words in s. 43(2C) inserted (19.3.1997) by 1997 c. 16, s. 41(3)(5)
  21. F371Words in s. 43(2C)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 285(a) (with Sch. 2)
  22. F372Words in s. 43(2C)(c) inserted (with effect in accordance with s. 200(8) of the amending Act) by Finance Act 2012 (c. 14), s. 200(2)
  23. F373Words in s. 43(2D)(c) omitted (with effect in accordance with Sch. 36 para. 14(3) of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 36 paras. 7(3)(a)(i), 14(2) (with Sch. 36 paras. 14(2), 19)
  24. F374Words in s. 43(2D)(c) inserted (with effect in accordance with Sch. 36 para. 14(3) of the amending Act) by Finance Act 2009 (c. 10), Sch. 36 paras. 7(3)(a)(ii), 14(2) (with Sch. 36 paras. 14(2), 19)
  25. F375Words in s. 43(2D) substituted (with effect in accordance with Sch. 36 para. 14(3) of the amending Act) by Finance Act 2009 (c. 10), Sch. 36 paras. 7(3)(b), 14(2) (with Sch. 36 paras. 14(2), 19)
  26. F376Words in s. 43(2E)(b) substituted (with effect in accordance with Sch. 36 para. 14(3) of the amending Act) by Finance Act 2009 (c. 10), Sch. 36 paras. 7(4), 14(2) (with Sch. 36 paras. 14(2), 19)
  27. F377S 43(3)-(8) repealed (27.7.1999 with effect as mentioned in Sch. 2 para. 6 of the amending Act)) by 1999 c. 16, ss. 16, 139, Sch. 2 para. 1(3), Sch. 20 Pt. II(1)
  28. F378S. 43(5A) inserted (1.5.1995 with effect as mentioned in s. 25(5) of the amending Act) by 1995 c. 4, s. 25(4)(5)
  29. F379S. 43(9) inserted (29.4.1996) by 1996 c. 8, s. 31(1)