Brexit’s VAT dividend

Multiple-choice questions. In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please reread the article before attempting the questions again.

According to the text, who is considered the biggest Brexit winner in terms of VAT?

UK financial sector

EU financial sector

UK manufacturing sector

UK retail sector

What was the key change announced by HMRC in November 2025 regarding VAT groups?

Requiring all EU branches to register separately for VAT

Abolishing VAT groups entirely

Increasing VAT rates on financial services

Allowing any overseas establishments to be treated as part of UK VAT groups

What is the effect of intra-VAT group transactions?

They are taxed at a higher rate

They require additional reporting

They are disregarded for VAT purposes

They are exempt from all taxes

Why is the removal of the reverse charge mechanism beneficial for partially exempt businesses?

It eliminates all VAT obligations

It increases their revenue

It simplifies export procedures only

It reduces irrecoverable VAT

What did the Skandia judgment require before the policy change?

VAT groups to be abolished

All financial services to be exempt from VAT

Certain intra-entity supplies to be treated as taxable

Intra-entity supplies to be ignored

What opportunity may now be available to some VAT groups due to updated HMRC guidance?

Claiming new tax credits

Avoiding VAT registration

Filing for bankruptcy

Reclaiming overpaid VAT

What major change occurred when the UK left the EU single market regarding input tax deduction?

It was completely removed

It was restricted further

It was expanded to include input tax directly to services to EU customers

It was limited to UK-only transactions

Before Brexit, input tax deduction on financial services exports was allowed only for services supplied to

EU residents

UK residents

Government bodies only

Non-EU persons

What is a potential consequence of the UK VAT system diverging from the EU’s?

Lower tax rates across all sectors

Greater uncertainty in interpretation

Increased certainty in tax rules

Elimination of VAT disputes

What change occurred with the Retained EU Law (Revocation and Reform) Act 2023?

UK law could still be overridden by EU law

VAT rules were abolished

UK law became supreme over EU law

EU law became dominant in the UK

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