Tax Questions: Handling Delays for VAT Groups

Directors Loan Account

Setting up a VAT group can help to reduce administration costs, as transactions between the companies within the group are VAT-free and a single VAT return can be submitted for the whole group.

However, HMRC has been taking months to react to requests to set-up, amend, or delete a VAT group. This leaves those companies that want to be part of the VAT group, or which wish to leave it, in VAT limbo.

If your company is affected, you should assume the VAT group registration or change has taken effect from the day the request was submitted electronically, or from the nominated date if that is different. The representative member of the VAT group should incorporate the VAT figures from any new joiners into the groupโ€™s VAT return from that date.

The company that is trying to join the VAT group may receive alarming letters or assessments from HMRC, but any penalties or assessments should be cancelled when the VAT group registration is amended.

Please let us know when any such HMRC letter arrives. We can then ensure that HMRC are aware that a VAT group application is in progress and collection of any apparent outstanding estimated VAT debts should not proceed.

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