- Do you control more than one business?
- Are they VAT registered or about to become VAT registered?
- Do they not only trade with unconnected businesses but also between themselves?
- Is there a cash flow problem arising from one of your entities having to charge VAT on a supply of goods or services to another one of your businesses?
- Is there a painful administrative burden, in respect of time and money, having to complete and submit a quarterly VAT return for each business?
If the answer to these questions is in the affirmative, there may be a way to alleviate this problem by forming a VAT Group.
Each business could become a member of that Group. You would nominate a member to be the representative for the Group to deal with VAT matters. For VAT purposes the Group would be regarded as one entity. The beauty of that is:
a) The nominated representative would only have to complete and submit one quarterly VAT return for all the members.
b) With the odd exception, intra-group supplies between members can be disregarded for VAT, thereby helping out on the cash flow front.
Although the nominated representative would be responsible for the Returns and paying over any VAT due, ultimately all members within the Group would be joint and severally liable for any debt outstanding to the Crown.
It is not all plain sailing when thinking of opting for a VAT Group. Consideration needs to be given as regards the following:
- The potential location of any overseas establishment which is part of the Group.
- The impact of an overseas member of the Group buying in services to pass on to a UK member.
- The Northern Ireland Protocol.
- Where one or more members make partially exempt VAT supplies.
If you would like to explore whether a VAT Group is right for your businesses please do not hesitate to contact us.