Tag Archives: VAT-registration-change

Should I form a VAT Group? Pros and Cons

By   17 February 2026
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VAT Grouping

This is a very concise summary of matters that should be considered when deciding to form or disband a VAT. Grouping is optional although HMRC have powers to refuse an application in any case where it is necessary for the protection of the revenue.

What is a VAT group?

VAT grouping is a facilitation measure by which two or more entities can be treated as a single taxable person (a single VAT registration) for VAT purposes. The measure was once restricted to “Bodies Corporate” which includes; companies of all types and limited liability partnerships. However, from 1 November 2019, grouping is additionally available for all entities, including; partnerships, sole traders and Trusts in certain cases.

It is important to recognise the difference between a corporate group and a VAT group – these are two different things and it should not be assumed that a corporate group is automatically a VAT group.

It is worth remembering that it is possible to VAT group where no taxable supplies are made outside the group.

Pros

  • only one VAT return per quarter – less administration
  • 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 accounting is centralised
  • no VAT on supplies between VAT group members. No need to invoice etc or recognise supplies on VAT returns
  • usually improves the partial exemption position if exempt supplies are made between group companies
  • may improve input tax recovery if taxable supplies are made to a partly exempt group company
  • if assets are hived up or down into a group company before a company sale to a non-grouped third party, the VAT consequences of the intra-group movement may be ignored
  • may provide useful planning opportunities/convenience at a later date
  • sales invoices issued, or purchase invoices received, in the wrong company name would not require time-consuming amendment
  • there may be cashflow benefits in respect of intra-group charges
  • reduced chance of penalties on intra-group charges

Cons

  • all members of the group are jointly and severally liable for any VAT due
  • former VAT group members are also liable for any VAT debts due during the period of VAT group membership
  • only one partial exemption de-minimis limit for group – which decreases the ability to fully recover input tax
  • obtaining all relevant data to complete one return may take time thus possibly missing filing deadlines
  • a new VAT number is issued (previous ones are cancelled – which may lead to administration etc issues)
  • the representative member needs all of the necessary information to submit a VAT return for the group by the due date
  • via anti-avoidance provisions, assessments can be raised on the representative member relating to earlier periods when it was not the representative member and even when it was not a member of the group at that time
  • the limit for voluntary disclosures of errors on past returns applies to the group as a whole (rather than each company having its own limit)
  • the payments on account (POA) limits apply to the group as a whole. This applies to a business whose VAT liability is more than £2 million pa. This adversely affects a business’s cashflow
  • the cash accounting limit of £1,350,000 applies to the group as a whole (rather than each company having its own limit)
  • Transfers of Going Concerns (TOGCs) acquired by a partly exempt VAT group may result in an irrecoverable VAT charge as a result of a deemed self-supply
  • an option to tax made by a VAT group member is binding on all present and future members of the VAT group. This is so even after a company has left the VAT group

We strongly recommend that professional advice is taken when a business is either considering forming a VAT group, or when thought is being given to disbanding one. Making the wrong decision could be very expensive indeed.  Specific matters that dictate VAT advice are when:

  • property is involved
  • inter-company charges are made
  • TOGCs are involved
  • costs in respect of restructuring are incurred (a current hot potato in the courts)
  • there is an international aspect to a group
  • a reverse charge applies
  • a company has been involved in the penalty regime
  • companies become insolvent
  • a VAT group is subject to POA
  • a company, or the VAT group, makes exempt supplies.

We are always happy to advise when required.

VAT Grouping: Protection of the Revenue

By   9 December 2025
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The salient amendments are to the references to ‘protection of the revenue’ and ‘Revenue loss’.
VAT grouping is a facilitation measure by which two or more entities can be treated as a single taxable person (a single VAT registration) for VAT purposes. The measure was once restricted to “Bodies Corporate” which includes; companies of all types and limited liability partnerships. However, from 1 November 2019, grouping is additionally available for all entities, including; partnerships, sole traders and Trusts in certain cases.
HMRC has the vires to refuse an application for a VAT group, or remove a member if HMRC consider that it may lead to a VAT loss.

The Change

“The definition of ‘protection of the revenue’

Where this is considered necessary for the protection of the revenue, the VAT grouping legislation gives HMRC the power to:

  • prevent a person joining a VAT group
  • remove an existing member from a VAT group

We usually will not use our protection of the revenue powers if the revenue loss follows from the normal operation of grouping. If we feel that the revenue loss does not follow the normal operation of grouping, then we would consider using our protection of the revenue powers, such as:

  • where we identify enhanced risks to the collection of revenue
  • the use of VAT avoidance and distortion in the liability of the group’s supplies

In this context, ‘revenue loss’ means the VAT that is not charged when one company in a group sells to another company in the same group. This usually happens when one or more companies in the VAT group cannot reclaim all the VAT they pay because they make supplies that are exempt from VAT.

We will use our revenue protection powers if it looks like the main reason for VAT grouping someone is to ignore supplies from that company’s overseas branches to other members of the VAT group.

This applies whether that person is established in the UK or has a UK fixed establishment”.

VAT: Change of registration details – update

By   3 November 2022
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If any of the following details of a business’ registration changes, HMRC must be notified on form VAT484:

  • name, or trading name
  • address of the business
  • accountant or agent who deals with a business’ VAT
  • members of a partnership, or the name or home address of any of the partners (a form VAT 2 is also required)

The relevant guidance has been updated to reflect the new requirement that such changes must be notified within 30 days of the change taking place. Failure to do so will result in penalties.

Other changes

  • Change of bank details

HMRC must be notified at least 14 days in advance if a business changes its bank details.

  • Taking over someone else’s VAT responsibilities

A person must tell HMRC within 21 days if they take over the VAT responsibilities of someone who has died or is ill and unable to manage their own affairs. Use form VAT484 and post it to the address on the form.

  • VAT group changes

If you join or leave a VAT group, you must first cancel your VAT registration. You will need to use the group’s VAT number once you’ve joined it. The VAT group should tell HMRC about the new member.

  • Change of business structure

You need to tell HMRC if the structure of the business changes, eg; incorporation or a Transfer Of a Going Concern.