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Understanding VAT Group Registration: A Comprehensive Guide

Updated: Feb 16

VAT group registration is a facilitation measure provided by the UK government that allows two or more eligible persons to be treated as a single taxable entity for VAT purposes. This guide, based on the information provided in VAT Notice 700/2, aims to help businesses understand how VAT group registration works, its benefits, and the responsibilities it entails.


Understanding VAT Group Registration


What is VAT Group Registration?

VAT group registration is a mechanism that allows two or more eligible persons, such as bodies corporate, individuals, partnerships, and Scottish partnerships, to be treated as a single taxable person for VAT purposes. This means that the group is considered a single entity for VAT, and it is the representative member who is responsible for completing and submitting the single return on behalf of the group.


Eligibility for VAT Group Registration

To be eligible for VAT group registration, the persons must satisfy certain conditions. Bodies corporate can form a VAT group if they are established or have a fixed establishment in the UK, they are under common control, and they satisfy the conditions set out in section 3 of the VAT Notice 700/2. Non-corporate entities such as individuals and partnerships can join a VAT group if they control the UK body corporate or all of the UK bodies corporate in the VAT group, are carrying on a business by making supplies, and are established or have a fixed establishment in the UK in relation to that business.


The Process of VAT Group Registration

To apply for VAT group registration, the VAT50-51 form must be used. The form VAT1, which is completed for new group applications, must be signed by the representative member. The VAT50-51 form, which is completed for each global group application, should be signed by either the applicant company or the person controlling the group. The application should be submitted as soon as possible to ensure registration by the preferred date.


Benefits of VAT Group Registration

One of the main benefits of VAT group registration is that it simplifies the VAT accounting process. 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. This can be particularly beneficial if your accounting is centralized. Moreover, a single VAT Return is sent for the whole group, further simplifying the process.


Responsibilities Under VAT Group Registration

While VAT group registration offers several benefits, it also comes with certain responsibilities. The representative member is responsible for paying the VAT or receiving any repayment due. However, all the eligible persons are jointly and severally liable for any VAT debts. This means that if one member of the group fails to meet its VAT obligations, the other members can be held responsible.


Changes in VAT Group Registration

If a company that 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.


VAT group registration is a useful tool for businesses that meet the eligibility criteria. It simplifies the VAT accounting process and can offer significant administrative benefits. However, it also comes with responsibilities and potential liabilities, so businesses should carefully consider these factors before deciding to apply for VAT group registration.



The Procedure for VAT Group Registration


The Application Process for VAT Grouping Registration

To apply for VAT group registration or to modify your details, the VAT50-51 form is required. The VAT1 form, which is filled out for new group applications, must be signed by the representative member. The VAT50-51 form, filled out for each global group application, should be signed by either the applicant company or the person controlling the group.


If you wish for your accountant to register a VAT group or make changes to an existing group on your behalf, you must notify HMRC using the VAT53 form.


Timing of Application

It is recommended to apply as early as possible to ensure registration by your preferred date. Your application will typically take effect from the date HMRC receives it or a specified later date. HMRC then has a 90-day window to make inquiries about your application and may reject it.


Awaiting a Response to Your Application

While waiting for a response to your VAT grouping application, you should consider the application as provisionally accepted on the day it is received by HMRC and account for VAT accordingly. If you have not been issued with a group VAT registration number, you are not allowed to charge or show VAT on your invoices until it has been assigned.


Denial of Applications for Group Registration

HMRC will deny your application if you fail to meet the conditions for group registration. They may also deny any applications to form a new group or change or disband a group to protect the revenue where it appears to them that either allowing the application would raise concerns over the safe collection of revenue due, the application would facilitate VAT avoidance, or the revenue loss exceeds the normal operation of grouping.

In summary, the process of applying for VAT group registration involves comprehending the concept, knowing the eligibility criteria, using the appropriate forms, applying at the right time, and understanding the potential outcomes of the application. It's a process that necessitates a thorough understanding of the VAT regulations.


Understanding VAT Notice 700/2



Understanding VAT Notice 700/2: Group and Divisional Registration

VAT Notice 700/2 is a comprehensive guide provided by the UK government that outlines the rules and procedures for VAT group and divisional registration. This document is designed to help businesses understand the process of registering groups and divisions for VAT, and it replaces the previous version of the notice from August 2014.


The designated member is responsible for settling any VAT obligations arising from transactions made by the group with external third parties. This arrangement is particularly advantageous for businesses with centralized accounting systems. Since the group is recognized as a single taxable entity, transactions of goods or services within the group members typically do not require VAT accounting. A consolidated VAT return is submitted for the entire group.


Other Aspects of Group Registration

It is essential for the designated member to possess all relevant information to accurately complete and submit the group's VAT return by the specified deadline. All group members share joint and several liabilities for any VAT dues declared by the designated member. The group as a whole, rather than individual members, is subject to the limits of the partial exemption de minimis. For guidance on partial exemptions, refer to the Partial Exemption VAT Notice 706.


Groups that are partially exempt have the flexibility to implement practical or regulatory frameworks within the UK, thereby avoiding extra VAT charges. This includes the establishment of a service company responsible for staff employment and managing procurement, finance, human resources, and other services for all companies within the VAT group. The threshold for voluntary disclosure of past return errors also applies at the group level.


Cash accounting and payment on account thresholds are set for the group collectively, not for each member individually. General regulations concerning the personal use of business assets are equally applicable to VAT group registrations. For more details, consult the VAT Guide (VAT Notice 700).


Groups with members operating from multiple fixed establishments that provide services to other group members might need to perform specific calculations as per section 43(2A) of the VAT Act 1994. Additionally, for groups with international branches or headquarters, it's important to understand the implications of the Skandia judgment on intra-group transactions.


What is VAT Notice 700/2 About?

VAT Notice 700/2 provides essential background information about the group and divisional registration. It explains the forms required to apply for group or divisional registration. The notice also includes updates from the Budget 2018, which revised the eligibility criteria for VAT groups to include certain non-corporate entities such as individuals, partnerships, and Scottish partnerships.


VAT Group Registration

VAT grouping allows two or more eligible persons to be treated as a single taxable person for VAT purposes. Eligible persons include bodies corporate, individuals, partnerships, and Scottish partnerships, provided certain conditions are met. 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. All members of the group are jointly and severally liable for any VAT debts.


Divisional Registration

Divisional registration is a facility that allows a corporate body conducting business through various self-accounting units to register each of those units or divisions separately for VAT. However, a corporate body registered for VAT in the names of its divisions cannot have one of its divisions included in a VAT group.


Combining VAT Groups and Divisional Registrations

VAT Notice 700/2 clearly states that VAT groups and divisional registrations cannot be combined. A corporate body that is a member of a VAT group will not be allowed to register one of its divisions separately outside the group.


Who Can Join a VAT Group?

Bodies corporate can form a VAT group if they are established or have a fixed establishment in the UK, they are under common control, and they satisfy the conditions set out in section 3. Non-corporate entities such as individuals and partnerships can join a VAT group if they control the UK body corporate or all of the UK bodies corporate in the VAT group, are carrying on a business by making supplies, and are established or have a fixed establishment in the UK in relation to that business.


Features of Group Registration

The representative member accounts for any tax due on supplies made by the group to third parties outside the group. 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. A single VAT Return is sent for the whole group.


Applying for VAT Grouping Registration

To apply for VAT group registration or amend your details, use the VAT50-51 form. The form VAT1 register for VAT, which is completed for new group applications, must be signed by the representative member. The VAT50-51 form, which is completed for each global group application should be signed by either the applicant company or the person controlling the group.


Specified Bodies and the Eligibility Conditions

Certain bodies corporate, called ‘specified bodies’, are required to satisfy two extra conditions to be members of a VAT group. This is to prevent partly exempt buyers of services from setting up joint ventures within their VAT group, in order to buy in services without incurring irrecoverable VAT.


In conclusion, VAT Notice 700/2 is a critical document for businesses seeking to understand the intricacies of VAT group and divisional registration. It provides a wealth of information on the eligibility criteria, application process, and the responsibilities of group members. As always, businesses should consult with a tax professional to ensure they are meeting all their VAT obligations.



The Role of a Tax Accountant in VAT Group Registration


The Role of a Tax Accountant in VAT Group Registration in the UK

VAT group registration can be a complex process, especially for businesses that are not familiar with the intricacies of UK tax law. This is where a tax accountant can be of immense help. This article will explore how a tax accountant can assist you with VAT group registration in the UK.


Understanding VAT Group Registration

Before delving into the role of a tax accountant, it's important to understand what VAT group registration is. It's a provision that allows two or more companies, that are under common control, to be treated as a single taxable entity for VAT purposes. This can simplify accounting processes and potentially lead to cost savings. However, the process of applying for VAT group registration can be complex and requires a deep understanding of tax law.


Expert Guidance

One of the primary ways a tax accountant can assist with VAT group registration is by providing expert guidance. They can help you understand whether your business is eligible for VAT group registration and explain the potential benefits and drawbacks. They can also guide you through the application process, ensuring that you have all the necessary documentation and that your application is filled out correctly.


Navigating the Application Process

The application process for VAT group registration can be complicated. It involves filling out several forms, including the VAT50-51 form and potentially the VAT1 form. A tax accountant can help you navigate this process, ensuring that all forms are filled out correctly and submitted in a timely manner. They can also help you understand what to expect after your application has been submitted and how to respond to any inquiries from HMRC.


Ensuring Compliance

Compliance with tax laws is crucial for any business. A tax accountant can help ensure that your business is compliant with all relevant VAT laws and regulations. This includes ensuring that you're accounting for VAT correctly, that you're submitting VAT returns on time, and that you're paying the correct amount of VAT. If your business is part of a VAT group, the tax accountant can also help ensure that all members of the group are meeting their VAT obligations.


Ongoing Support

A tax accountant can provide ongoing support even after your VAT group registration has been completed. They can help you manage your VAT obligations, answer any questions you may have, and provide advice on any changes to VAT laws or regulations that may affect your business. They can also assist with any changes to your VAT group, such as adding or removing members.


Dealing with HMRC

Dealing with HMRC can be daunting, especially if your application for VAT group registration is rejected or if you're subject to a VAT investigation. A tax accountant can act as an intermediary between your business and HMRC, helping to resolve any issues and ensuring that your business is treated fairly.


In conclusion, a tax accountant can be an invaluable resource when applying for VAT group registration in the UK. They can provide expert guidance, help navigate the application process, ensure compliance with VAT laws and regulations, provide ongoing support, and assist in dealing with HMRC. While hiring a tax accountant does involve a cost, the peace of mind and potential cost savings they can provide often make it a worthwhile investment.




1. Q: What is the threshold for VAT registration for a VAT group in the UK?

A: The VAT registration threshold for a VAT group is the same as for individual businesses, which is currently £85,000 of taxable turnover in a 12-month period. However, all group members' turnovers are combined to determine if the threshold is exceeded.


2. Q: Can overseas companies be part of a UK VAT group?

A: Yes, overseas companies can be part of a UK VAT group if they have a fixed establishment in the UK, which is capable of making taxable supplies.


3. Q: How does VAT group registration affect the supply of services and goods between group members?

A: Supplies of services and goods between VAT group members are disregarded for VAT purposes, meaning they do not attract VAT.


4. Q: What are the main advantages of VAT group registration?

A: The main advantages include simplified VAT accounting, as the group files a single VAT return, and the elimination of VAT on supplies between group members, potentially leading to cash flow benefits.


5. Q: Are there any disadvantages to VAT group registration?

A: Disadvantages include joint and several liability for VAT debts of the group by all members, and potential complexities in administration if the group's composition changes frequently.


6. Q: How long does it take to process a VAT group registration application?

A: The processing time can vary, but HMRC aims to complete applications within 30 days of receipt.


7. Q: Can a VAT group registration be backdated?

A: Yes, in certain circumstances, HMRC may allow VAT group registrations to be backdated, but this is subject to their discretion and specific conditions.


8. Q: How does leaving a VAT group affect a company?

A: When a company leaves a VAT group, it must account for VAT on its own and may need to register for VAT separately if it meets the registration threshold.


9. Q: Can a VAT group be disbanded?

A: Yes, a VAT group can be disbanded if the entities no longer meet the eligibility criteria or if they choose to deregister by notifying HMRC.


10. Q: How are imports and exports treated within a VAT group?

A: Imports and exports by VAT group members are treated as if they were made by the representative member, affecting the group's VAT returns accordingly.


11. Q: What happens if a new member joins the VAT group?

A: When a new member joins the VAT group, the representative member must notify HMRC, and the new member's turnover is included in the group's VAT calculations.


12. Q: Are there specific records that a VAT group must maintain?

A: Yes, VAT groups must maintain records that support all transactions and VAT returns, similar to individual VAT-registered businesses.


13. Q: Can a VAT group claim input tax credit?

A: Yes, a VAT group can claim input tax credit on expenses incurred for the purposes of the group's taxable supplies.


14. Q: What are the implications of VAT group registration for partial exemption calculations?

A: VAT group registration may simplify partial exemption calculations by treating the group as a single entity, but all members' inputs and outputs are considered in the calculation.


15. Q: How is VAT group registration impacted by changes in group members' ownership or structure?

A: Changes in ownership or structure affecting control or eligibility criteria may require the VAT group to be re-evaluated and possibly re-registered or disbanded.


16. Q: What is the role of the 'representative member' in a VAT group?

A: The representative member is responsible for submitting VAT returns and payments on behalf of the group and is the main point of contact with HMRC.


17. Q: Can a VAT group include charities or non-profit organizations?

A: Yes, charities and non-profit organizations can be part of a VAT group if they meet the eligibility criteria, including control and business activity requirements.


18. Q: What are the consequences of non-compliance with VAT group registration rules?

A: Non-compliance can result in penalties, interest charges on unpaid VAT, and potential deregistration or re-assessment of VAT liabilities by HMRC.


19. Q: How does VAT group registration interact with the Flat Rate Scheme?

A: VAT groups are not eligible for the Flat Rate Scheme; they must account for VAT under standard or other applicable VAT schemes.


20. Q: Can a VAT group be formed with entities in different UK countries (e.g., England, Scotland, Wales, Northern Ireland)?

A: Yes, a VAT group can include entities located in different parts of the UK, as long as they meet the eligibility criteria for VAT.


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