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VAT group registration: safety in numbers?

Neil Warren considers some of the administrative and potential tax-saving benefits of forming a VAT group.

TAXlineA VAT group is intended to be an administrative timesaver for UK businesses. Another potential benefit is that in some situations it will produce reduced payments on monthly or quarterly VAT returns. It is important to stress that these tax savings should come as a result of normal commercial arrangements and must not be artificial schemes unintended by the legislation. I’ll share some practical examples of the savings in this briefing.

A common query I get from accountants is whether a business that is joining a VAT group can keep its existing VAT number. The answer is ‘no’ – if two or more bodies seek to form a VAT group, then all their existing registrations are cancelled and the following day the new group is formed, with its unique VAT number. The stand-alone registrations are cancelled by submitting the usual deregistration form VAT7 to HMRC (either online or in paper format), ticking the box for “I am joining a VAT group” as the reason for deregistration.

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