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When can a company joining a VAT group be included

Company awaiting approval for joining a VAT group, VAT return due

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A newly formed company, not currently VAT registered, is to join an existing VAT group. It is a wholly owned subsidiary of the representative member. The relevant forms were submitted to HMRC at the start of November 2021 which they lost but have now found. Per HMRC, there is a 6 month processing backlog. The application is still within the 90 day objection window. Newly formed company has significant input VAT which the group would like to claim.

I am assuming that Newco's VAT amounts can not be included within the current group return pending HMRC acceptance. But I thought I would ask whether there is any scope?

 

PS Apologies for the lack of a question mark in the title. I ran out of characters.

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By lionofludesch
07th Jan 2022 12:19

I'd claim. The group shouldn't be inconvenienced by Government admin failures.

It's not so long since 15 working days was quoted for new registrations and that was not required more often than not.

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By lionofludesch
07th Jan 2022 12:23

Equally, I ought to point out that if there was more output tax than input tax, I'd've included that too.

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By paulwakefield1
07th Jan 2022 13:00

Thank you Lion.

I agree re Output tax of course but there is none in the period.

The overall group is likely to be a reclaim this quarter and Newco is a significant proportion (~25%) of that and the return will therefore get more interest from HMRC so want to be able to justify the approach.

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By Hugo Fair
07th Jan 2022 15:28

Naive question but, when you say "A newly formed company .. is to join an existing VAT group" - what determines the effective date of registration (when it is finally accepted by HMRC)?

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By paulwakefield1
07th Jan 2022 15:47

Fair question. It should be from the date the application was received by HMRC.

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By Hugo Fair
07th Jan 2022 17:57

So, given "relevant forms were submitted to HMRC at the start of November 2021 which they lost but have now found" ... presumably you're good to go?

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By paulwakefield1
07th Jan 2022 18:14

Well HMRC have 90 days to object and, although there are no known reasons why they might, the client is still in that window.

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By Hugo Fair
07th Jan 2022 19:13

Indeed, so my pragmatic (non-accountancy) approach would be to claim the input tax ... but ensure that clients knows this remains a repayable liability until HMRC have accepted/confirmed registration.
This is based on the practicality that it's nearly always easier to repay HMRC than to retrospectively claim money from them!
And, as TD would say, this is NOT advice - just thinking aloud.

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By paulwakefield1
07th Jan 2022 19:15

Hmmm - that matches my thinking aloud as well. Will discuss risks with client and see what they want to do. (I know the anwer to that one).

Have a good weekend.

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By lionofludesch
07th Jan 2022 20:59

paulwakefield1 wrote:

Hmmm - that matches my thinking aloud as well. Will discuss risks with client and see what they want to do. (I know the anwer to that one).

Have a good weekend.

What's the risk, exactly? Why do you think the application will be rejected?

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By paulwakefield1
08th Jan 2022 11:17

No concerns, just natural caution. Until the man (or woman) from HMRC says "Yes".......... If it was outside the 90 day window, I would be gung ho about it.

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By lionofludesch
08th Jan 2022 11:22

What's the risk ?

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By paulwakefield1
09th Jan 2022 10:38

As per Hugo Fair's 07.01 19:13 post. And this is going to be quite a high profile group return so am expecting HMRC interest.

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