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. Eligible persons are bodies corporate, individuals, partnerships and Scottish partnerships, provided that certain conditions are satisfied. Bodies corporate includes companies of all types and limited liability partnerships.
Under a VAT 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 for those whose accounting is centralised. As a VAT group is treated as a single taxable person, they do not normally account for VAT on goods or services supplied between group members. Only one VAT return is required for the whole group and all members of the group are jointly and severally liable for the tax due from the representative member.
There are other important points to be aware of in respect of a VAT group registration. For example, the representative member must have all the necessary information to submit a VAT return for the group by the due date. The partial exemption de minimis limits apply to the group as a whole and not the members individually.
HMRC’s guidance on Group and divisional registration (VAT Notice 700/2) has recently been updated to include a new section about late payment submission penalties and to update the list of notifications you may receive while waiting for your VAT grouping registration number.
Please contact Jane Bull, our Director of Accounting, to discuss whether you are able to register as a VAT group and how we can help get this set up.