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1. HMRC definition of a VAT Group |
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The following information has been taken from HMRC’s guidance on Group and divisional registration (VAT Notice 7000/2), dated the 26th November 2019. VAT group registrationVAT grouping is a facilitation measure by which 2 or more eligible persons can be treated as a single taxable person for VAT purposes. Eligible persons are bodies corporate, individuals, partnerships and Scottish partnerships, provided that certain conditions are satisfied (see section 2.2). Bodies corporate includes companies of all types (see section 10) and limited liability partnerships. How group registration worksA group of eligible persons may apply to be treated as a single taxable person for VAT purposes. The registration is made in the name of the representative member, who is responsible for completing and rendering the single return on behalf of the group.
Whilst the representative member is responsible for paying the VAT or receiving any repayment due, all the eligible persons are jointly and severally liable for any VAT debts. Supplies between group members are normally disregarded for VAT (see section 7 for details of when supplies are not disregarded). What are the essential features of group registration?The representative member accounts for any tax due on supplies made by the group to third parties outside the group – this is particularly helpful if your accounting is centralised.
If a company which is a member of a VAT group wishes to register some of its divisions separately, it must first apply to leave the VAT group before it can apply for registration in the names of its divisions.
Conversely, a corporate body, which is registered in the names of its divisions and wishes to form a VAT group with other associated companies or to join an existing VAT group, must first apply to cancel the registration of all of its divisions.
Other features of group registration
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