Registering as a VAT Group

Introduction

A VAT group allows two or more eligible businesses under common control to register as a single entity with one VAT number. This simplifies VAT accounting by removing the need to charge VAT on supplies between group members and allows you to submit one VAT return for the entire group. All group members remain jointly liable for any VAT debts, even though only the representative member submits returns.

Who can form a VAT group

Your businesses can form a VAT group if they meet specific control conditions. Bodies corporate (including companies and limited liability partnerships) can join a VAT group if:

• Each is established or has a fixed establishment in the UK
• They are under common control
• They satisfy any other applicable conditions

The term "control" has a specific meaning based on the definition of holding company and subsidiary in the Companies Act 2006.

Individuals, partnerships and Scottish partnerships can also join a VAT group if they:

• Control the UK body corporate or all UK bodies corporate in the VAT group
• Are carrying on a business by making supplies
• Are established or have a fixed establishment in the UK in relation to that business

Benefits of VAT group registration

Registering as a VAT group offers several advantages:

Simplified accounting: The representative member accounts for all VAT on supplies the group makes to customers outside the group. This works particularly well if your accounting is centralised.

No VAT on intra-group supplies: Because the group is treated as a single taxable person, you do not normally account for VAT on goods or services supplied between group members.

Single VAT return: You submit just one VAT return for the entire group, rather than separate returns for each member.

Practical business restructuring: Partially exempt groups can adopt practical or regulatory structures within the UK without incurring additional VAT costs. For example, you could set up a service company that employs all staff and operates procurement, finance, human resources and other functions on behalf of all companies in the VAT group.

Important considerations

Before forming a VAT group, understand these key points:

Joint liability: All members of the group are jointly and severally liable for the tax due from the representative member. This means HMRC can pursue any group member for the full amount of any VAT debt.

Group-wide limits: Various VAT thresholds and limits apply to the group as a whole, not to individual members. This includes:

• Partial exemption de minimis limits
• Cash accounting limits
• Payment on account limits
• The limit for voluntary disclosures of errors on past returns

New VAT number: When a VAT group registers, any previous VAT registration numbers that individual members held will be cancelled. A new number will be issued to the group as a whole, which all group members must then use. If the group is disbanded later, this number is cancelled and any members still liable to register will receive new VAT numbers.

Information requirements: The representative member needs all necessary information from group members to submit an accurate VAT return by the due date.

No divisional registration: You cannot combine VAT group registration with divisional registration. A company that is a member of a VAT group cannot register one of its divisions separately. If you want to register divisions separately, the company must first leave the VAT group.

How to apply for VAT group registration

To register a new VAT group, you'll need to complete form VAT50/51. Before starting, gather the following information for each proposed group member:

• Their incorporation status, number and incorporation date (if applicable)
• Their VAT registration number (if already registered)
• Their total expected taxable and non-taxable turnover (including supplies to fellow group members)
• Their location
• Confirmation they meet the control conditions
• Details of any payments made or received for supplies to be delivered after they've joined the group

You'll also need to confirm:

• The exemption status of each proposed group member and the actual group once set up
• Whether they have capital assets acquired within the last 3 years which are, or will be, leased or used by members of the group
• Whether they own capital assets subject to the Capital Goods Scheme when the application takes effect

Application process:

1. Get all your information together before starting (you cannot save your progress partway through)

2. Fill in form VAT50/51 online

3. Print and post it to HMRC using the postal address shown on the form

4. Upload the VAT50/51 to your online VAT registration once you have registered

If you need the form in a more accessible format, email different.format@hmrc.gov.uk stating what format you need and what assistive technology you use.

Adding or removing group members

If your VAT group is already registered and you need to add or remove members, you can amend the group using the same form VAT50/51.

To add members, you'll need the same information listed above for new group applications.

To remove members, you'll need for each member leaving:

• Their VAT registration subsidiary reference
• Their incorporation status, number and incorporation date (if applicable)
• Their total expected taxable and non-taxable turnover (including supplies to fellow group members)
• Confirmation of whether any of the companies have applied for VAT registration and the reason each company is leaving
• Whether they own any capital assets subject to the Capital Goods Scheme when the application takes effect
• Their exemption status
• Details of any payments made or received for supplies to be delivered after they've left the group
• Whether they expect to incur input tax after leaving the group relating to supplies made when they were still a member

You can amend the group online by signing in to HMRC's service. If you're an agent, you'll need to sign in with your agent services account Government Gateway user ID and password, or create an agent services account.

If you cannot use the online service, fill in form VAT50/51, print it and post it to HMRC. Insolvency practitioners cannot use the online service and must use the paper form.

Changing the representative member

The representative member is the lead company or other corporate body responsible for submitting VAT returns on behalf of the group. If you need to change the representative member, use form VAT56.

Before applying, note that if the proposed new representative member is not already a member of the VAT group, you must first complete form VAT50/51 to add them.

Information you'll need:

• VAT registration number of the current representative member
• Full names of both the current and proposed representative members
• Full details of any special status for VAT purposes the proposed representative member holds

You can apply online by signing in to HMRC's service, or if you cannot use the online service, fill in form VAT56, print and post it to HMRC using the postal address shown on the form.

Disbanding a VAT group

If you wish to disband a VAT group entirely, use the online service to amend the VAT group or complete form VAT50/51. You'll need to provide the information listed above for members leaving the group.

When a group is disbanded, the VAT registration is cancelled. Any members still liable to be registered, or entitled to apply for registration, will be re-registered with new VAT numbers.

Authorising an agent

If you want an accountant or other agent to form or amend a VAT group on your behalf, you'll need to authorise them using form VAT53.

Sources

• Apply for VAT group registration
• Amend a VAT group
• Apply to change the representative member of a VAT group
• Group and divisional registration (VAT Notice 700/2)

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.