NatWest has won in principle its fight to include an Irishced back to square one. organisation in its VAT group, but the UK bank has been forced to restart its group application process.
A VAT tribunal accepted NatWest’s argument that Dublin-based Ulster Bank Investment Managers could apply to come under NatWest’s VAT umbrella.
The tribunal ruled, however, that the group would have to submit a fresh application, which has a strong chance of being turned down by Customs & Excise.
UBIM is a wholly owned subsidiary of Ulster Bank, which is already included in NatWest’s VAT calculations, and NatWest said that, as one of the UBIM’s directors lived in the UK, the company was eligible to join the group.
Customs officials countered that the bank’s group was already large enough, and that further grouping could not be allowed ‘for the protection of revenue’.
The gross annual input tax of NatWest group was #1.5bn, of which some #200m was irrecoverable because the group was partially exempt.
The tribunal agreed the term ‘protection of the revenue’ could be applied, but said Customs officials should have written to the bank, stating that they were considering turning the application down, and asking for more information.
In not doing so, according to the tribunal, commissioners ‘failed to have regard to matters to which they should have given weight’, and so the appeal was allowed.
NatWest and its auditor KPMG said they have asked for clarification of the ruling in a bid to avoid re-applying.
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