20. VAT group registrations
What a VAT group registration is and how it works.
A VAT group registration allows 2 or more companies or limited liability partnerships, known as ‘bodies corporate’, to account for VAT under a single registration number.
The group is registered in the name of the representative member, who is responsible for completing and submitting 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 group members are jointly and severally liable for VAT debts incurred during the period of their membership.
Only corporate bodies established, or with a fixed establishment, in the UK can be members of a VAT group. Such corporate bodies must also satisfy the control condition.
The control condition is that all members of the group are controlled either by one member of the group or a single other ‘person’ who is not one of the members of the group. That person can be a body corporate, an individual or a partnership. That person is known as the controlling body.
More information can be found in Group and divisional registration (Notice 700/2).
20.6.1 Insolvency of the controlling body
If a controlling body for a VAT group registration becomes insolvent, an insolvency practitioner is appointed. In such circumstances, the VAT group registration does not need to change, unless the controlling body ceases to meet the control criteria as set out in the VAT Act 1994 s43A and 43AZA.
The control, which must be exercised in order fulfil this condition, is set out section 1159 of and Schedule 6 to the Companies Act 2006.
For more information read Group and divisional registration (Notice 700/2).
20.6.2 Insolvency of a group member
If an insolvency practitioner has been appointed over any VAT group member other than the controlling body, it may remain in the VAT group with effect from the date the insolvency practitioner is appointed, as long as the group continues to meet the control conditions as set out in the VAT grouping rules set out in the VAT Act 1994 s43A and 43AZA.
The control, which must be exercised in order fulfil this condition, is set out section 1159 of and Schedule 6 to the Companies Act 2006. For more information, read section 2.9 in Group and divisional registration (Notice 700/2).
If the VAT grouping control conditions for the group member are no longer met, then the entity should be registered for VAT separately. If the insolvent group member being removed is the representative member, it will be the responsibility of the VAT group to nominate a new representative member and inform us accordingly.
The joint and several liability of VAT groups will be unaffected by this change. Each member of the VAT group will continue to be jointly and severally liable for any VAT debts.
For more information, read the VAT groups manual VATGROUPS01500: liability of VAT group members.