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HMRC internal manual

VAT Input Tax

From
HM Revenue & Customs
Updated
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How to treat input tax: group registrations

 

Pre-registration claims

If an unregistered company joins a group registration, the representative member may recover VAT incurred by the new member prior to its entry into the group. Any claim is subject to the normal rules - see VIT32000. It will not be able to recover any tax attributable to the unregistered member’s exempt supplies.

Post-registration claims

If a member leaves a group registration and does not register in its own right the representative member may recover VAT incurred by the departed company after the date of its leaving. Any claim is subject to the normal rules - see VIT32000.

For example, imagine the representative member of a group registration incurs accountancy fees for two years on one of its subsidiary companies. The company was not a member of the VAT group in the first year but became a member six months into the second.

Any tax claimed has to be in relation to the time during which the subsidiary company was a member of the VAT group. So no tax can be recovered on the accountancy fees for the first year. VAT can be reclaimed on half of the accountancy fees for the second year since the subsidiary company became a member of the VAT group six months into that year.