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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
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Debt and return pursuit: VAT: liability for payment: VAT group registrations

Two or more companies can apply for VAT group treatment. One of the companies registers for VAT on behalf of the group and all the companies in the group account for VAT via this representative member. See V1-28 Registration.

Group members are liable together and individually (jointly and severally) with the representative member for VAT incurred by the (representative member on behalf of the) group. This liability extends to a particular company only to the debts incurred at a time when the company was a member of the group.

If the member has since left the group it is still liable for any debts incurred whist a member. Section 43 (1) of the VAT Act 1994, provides:

“Where under sections 43A to 43C any bodies corporate are treated as members of a group, any business carried on by a member of the group shall be treated as carried on by the representative member, and all members of the group shall be liable jointly and severally for any VAT due from the representative member.”

The representative member, and therefore the group, is not liable for debts incurred by members before they joined the group. Although they are registered for VAT as a group, with one VAT registration number, each company is a separate legal entity.

Group members remain registered under the Companies Acts as limited companies and are individually liable for debts they incurred before they joined the group.