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Finance Act 2014

Section 104: VAT: Place of Belonging


1.This section ensures that bodies corporate or legal persons that are not in business are treated as belonging in the place where they are established rather than where they are legally constituted or anywhere else.

2.The section introduces an explicit reference to “permanent address” as the place of belonging for both persons in business and persons not in business in certain circumstances.

Background Note

3.The Value Added Tax Act 1994 currently treats bodies corporate that are not in business as belonging in the country where they are legally constituted. This provides scope for the use of such entities in certain types of avoidance. The VAT Act 1994 is also inconsistent with the Principal VAT Directive 2006/112/EC. The change will make the place of belonging for the purposes of the VAT Act 1994 the place of establishment. The section also provides that other legal persons who are not in business belong where they are established.

4.Section 9 provides that in certain circumstances a person may be treated as belonging at their usual place of residence. This may be the same as where they have their permanent address, although need not be. This section expressly refers to the concept and better reflects the wording of the Directive.

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