Are you VAT registered? Would a VAT group be more convenient?
On a recent seminar, the idea of setting up a VAT group was discussed and based on this, we thought it would be useful to highlight some of the pros and cons of setting up a VAT group.
If you would like us to review the possibility of setting up a VAT group for your companies then please contact us.
We set out below the major advantages and disadvantages of using a group VAT registration.
When you set up a VAT group all companies in the group will have one VAT registration this means that there is only one VAT return each quarter for all companies.
Any transactions between the entities in the VAT group are outside the scope of VAT and therefore no VAT would need to be charged inter-company. However, there must be taxable supplies to businesses or consumers outside the group to be able to register the VAT group.
Your holding company can be included in a VAT group registration which would mean that all input VAT on expenses in the holding company could also be reclaimed.
When a VAT group is set up all the previous VAT registration numbers are cancelled and one number is used for the group. If any entity in the VAT group leaves the VAT group and needs to register individually a new VAT registration number will have to be applied for and used.
The work involved in completing your VAT return may be more complex and time-consuming due to the additional information that will need to be collated and considered including any partial exemption issues.
However, if a proper system is implemented and followed, then this aspect of the work should not be a source of any continuing problems if you decide that this is the right move for your business.
It should be noted that all the members of the VAT group are jointly and severally liable for any VAT debts of the other companies in the vat group.
If you would like to discuss whether setting up a VAT group registration could work for you or wish to discuss this further before making a decision then please contact us on 01332 680540.
September 9th, 2013