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HMRC internal manual

VAT Groups

Eligibility conditions for specified bodies: specified bodies: what happens if the body corporate is dormant or has not yet started the business activity?

A body corporate can only be a specified body when it is carrying on a relevant business activity, so the rules do not apply to dormant companies. A body corporate will be carrying on a business activity at any time that it makes a supply in the course of the activity, or when it is undertaking the work necessary to make the supplies.

These anti-avoidance rules cannot be circumvented by bringing the body in as a dormant company and only starting trading later. As soon as the body starts to trade, it will become a specified body and so subject to the rules. If it fails the tests, it will cease to be eligible for group treatment.