VAT group disregard applies only while group membership exists; later delivery outside the group remains taxable on full consideration.

VAT group rules require the statutory time-of-supply provisions to be applied first. An advance payment made while supplier and purchaser were in the same VAT group fixed the timing of the supply only to the extent of that payment, but the group disregard operated merely to ignore intra-group supplies while that relationship existed. It did not permanently remove the taxable value of the transaction. When the goods were later delivered after the supplier had left the group, the remaining supply was outside the group and taxable on the full consideration.

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Issues: Whether, for value added tax purposes, an advance payment made while the supplier and purchaser were members of the same VAT group caused 90 per cent of the supply to be disregarded under the group provisions, so that tax was chargeable only on the balance when the goods were later delivered after the supplier had left the group.

Analysis: The relevant provisions required the time of supply to be determined under the statutory time-of-supply rules before applying the group disregard. A supply could be treated as taking place in stages to the extent of the payment received, but it remained a single supply. Section 29 operated as a disregard provision, not as an exemption, and did not eliminate the underlying transaction. The advance payment therefore fixed the time of supply to the extent covered by that payment, but the group disregard could not permanently exclude the taxable value of the transaction. When the goods were delivered after the supplier had left the group, the remaining supply was a supply outside the group and was taxable on the full consideration. The alternative Ramsay argument was not necessary to decide the case.

Conclusion: The whole consideration was taxable and the appeal failed.

Ratio Decidendi: For VAT group transactions, the statutory time-of-supply rules must be applied first to identify the supply, and the group disregard then operates only to disregard supplies made between group members while that relationship exists, without permanently excluding the taxable value of a supply completed outside the group.

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