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TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17124
Experience:  International tax
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This is with regards ***** ***** registration for VAT. HMRC say

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This is with regards ***** ***** registration for VAT. HMRC say that two or more companies CAN form a VAT group if they satisfy the following conditions:
•each has an establishment in the UK
•they are under common control
My question is - if two companies meet these two conditions, do they HAVE to form a group? Reason I ask - I am setting up two companies at the same time and will fully own both of them.
Question 2 - are there any circumstances where HMRC can force two companies to form a VAT group?
Hello and thank you for allowing me to assist you.
There are some times when you can only register as a group. If the turnover of your group of companies is over £10 million per year and the group is partly owned or managed by a third party, you can only register as a group for VAT if:
no more than 50 per cent of benefits generated by the business go to third parties
your group uses consolidated accounting
no third party consolidates your group into its accounts
It may happen if there is no company controlling the VAT group (eg the only person controlling the VAT group is an individual meaning you in your situation), or because the controlling company has a specific exemption from preparing consolidated accounts.
Under these circumstances, then you should look at what the position would be if consolidated accounts were prepared. You would only have to do this is the £10 million was reached.
Customer: replied 3 years ago.

Thank you - just to clarify then, as my companies will be start ups (£10m turnover is highly unlikely for a few years!) and neither company owns any part of the other (so no consolidated accounts), I'm right in saying there will be no obligation to register as a group for VAT - correct?


Yes, at this point you are correct.
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