What is HMRC's definition of a VAT Group

The following information has been taken from HMRC’s guidance on  Group and divisional registration (VAT Notice 7000/2), dated the 13th of September 2021.

VAT group registration

VAT 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 works

A 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.

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. You submit a single VAT Return for the whole group.

Other features 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 see Partial exemption (VAT Notice 706).

• Partially exempt groups can adopt practical or regulatory structures within the UK without incurring additional VAT costs – for example, setting up a service company that employs all staff, and operates the procurement, finance, human resources, and other functions on behalf of all the companies in the VAT group.

• The limit for voluntary disclosures of errors on past returns also applies to the group as a whole see paragraph 5.10.

• 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 see paragraph 5.9.

• The general rules on the personal use of business assets apply equally to VAT group registrations. See VAT Guide (VAT Notice 700/2) for further information.

• If you have group members with fixed establishments in more than one location, that make supplies to other members of the VAT group, you may need to make a calculation in connection with section 43(2A) of the VAT Act 1994 see section 7.

• If you have establishments (for example branches or head offices) overseas then you will need to be aware of the Skandia judgment and how it impacts on intra-group supplies see section 8.

Original VAT registration numbers

When a VAT group is registered, any previous VAT registration numbers that individual members may have had will be cancelled and a new number will be issued to the group as a whole. This number identifies the group as a taxable person and will remain unchanged, even if the membership is varied or the representative member is changed. This registration number must then be used by all the group members.

Similarly, if a group is disbanded, it will have the VAT registration cancelled and any members still liable to be registered, or if entitled, applying to be registered, will be re-registered and given new VAT numbers.

Being in more than one VAT group

From 22 July 2004 an eligible person may only be in one VAT group at a time. If you’re already in more than one VAT group, you must inform us immediately.

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