claiming VAT centrally for a group of associated companies

claiming VAT centrally for a group of...

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The company in question is a registered charity and a limited company by guarantee.   The nature of its business is changing and it is proposed that a mix of CICs and Co-operatives are set up but linked to the parent company.   It is also suggested that VAT is operated centrally for all the companies.   What would the advantages and disadvantages of this system be?  

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By Les Howard
24th Jan 2014 16:05

It depends!

Firstly, the VAT Group rules only apply to corporate bodies, so co-operatives might be excluded. You will have to check this point.

Whether a VAT Group is worthwhile depends mainly on those transactions made between group companies, and whether irrecoverable VAT is incurred on supplies between them. If there is a lot of irrecoverable VAT (e.g: on management charges to largely non-business or exempt bodies) then the Group option may be beneficial.

I think you need to engage a specialist to spend some time with the current figures and proposals, and make a more informed decision.

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By shaun king
24th Jan 2014 17:41

Agree

You cannot expect an answer on this forum as there is so much more information required before you can make an informed decision on whether you can form a VAT group and what the benefits of any are in having a VAT group.

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