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VAT grouping

There are special VAT rules that allow two or more corporate bodies to be treated as a single taxable person for VAT purposes known as a VAT group.

Advantages 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.
  • As the group is treated as a single taxable person, you do not normally account for VAT on goods or services supplied between group members.
  • Only one VAT return is required for the whole group.

Disadvantages of group registration

  • You will need to make sure that the representative member has all the necessary information to submit a VAT return for the group by the due date.
  • All members of the group are jointly and severally liable for the tax due from the representative member.
  • The partial exemption de minimis limits apply to the group as a whole and not the members individually.
  • The limit for voluntary disclosures of errors on past returns also applies to the group as a whole.
  • The cash accounting limits apply to the group as a whole and not to the members individually.
  • The payment on account limits will apply to the group as a whole and not to the members individually.

HMRC has recently updated the applicable VAT Notice 700/2: group and divisional registration. The notice cancels and replaces the previous version published in August 2014 and has been updated to reflect changes coming into effect on 1 April 2019 that clarify which overseas services can be classified as bought-in services to ensure that such services are subject to UK VAT.

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