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HMRC internal manual

VAT Cost Sharing Exemption Manual

How the conditions are to be interpreted: CSGs and VAT Groups: Can a CSG be a member of a VAT group?

Yes, provided all the relevant VAT grouping conditions are met, in particular the control condition. For example if the controlling entity of the VAT group was also a CSG member and had over 50 per cent of the shareholding of the CSG (but not 100 per cent, with the remaining shareholding spread between other CSG members) the CSG would meet the control condition to be a member of the VAT group.

In these circumstances the exempt supplies of the CSG would form part of those of the VAT group registration and input tax incurred by the CSG would form part of the VAT group registration’s input tax.