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HMRC internal manual

VAT Registration

From
HM Revenue & Customs
Updated
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Entity to be registered: clubs and associations: independence of sections, branches, sub-clubs and committees - basic principles

It is not uncommon for clubs, associations and local authorities to form sub-sections, sub-committees, branches, sub-clubs, and so on. This is done for various reasons. Sometimes they are set up to handle a new activity and for sound organisational reasons. Sometimes they are set up to fragment current activities and for tax planning reasons. This section explains when such subsidiary entities are to be treated as independent from the parent organisation and when they are to be treated as an integral part of it.

It is often difficult to determine whether such subsidiary entities are independent from the parent organisation. In the absence of any reasonable indications to the contrary, you should register them as part of the parent organisation.

However, in principle, there is nothing wrong or illegal in a club or association separating its trading activities and creating a subsidiary entity to carry out some of those activities. You should consider any representations from the trader that their activities are carried on by two (or more) separate entities, with only part of those activities being carried on by the parent organisation, carefully.