Answers · UK 2025/26
What are the VAT group registration rules in the UK?
A VAT group allows multiple related UK companies to be treated as a single VAT entity, filing one VAT return and eliminating VAT on intra-group supplies. To form a group, companies must be under common control (broadly 51%+ common ownership). The group registration threshold is the same £90,000 as individual registration. Only one group member (the representative member) manages the VAT account.
Full answer
VAT grouping is governed by Section 43 of the VAT Act 1994 and HMRC Notice 700/2. It allows two or more companies that are closely bound by financial, economic, and organisational links to be treated as a single taxable person for UK VAT purposes. **Key benefits of VAT grouping:** - Intra-group supplies (goods or services between group members) are disregarded for VAT -- no VAT is charged between group companies - One combined VAT return for the whole group, simplifying compliance - VAT refunds from one member can offset liabilities of another member - Useful for holding companies and property groups with mixed VAT status **Eligibility conditions:** - All members must be "bodies corporate" (limited companies, LLPs, or certain other incorporated entities) -- sole traders and individuals cannot join a VAT group - All members must be established or have a fixed establishment in the UK - Each member must be under common control -- broadly, one company controls the others (51%+ share ownership), or all are controlled by the same individual/entity - HMRC must approve the group application **Representative member:** One company acts as the representative member, files the return, and is jointly and severally liable for the group's VAT. **Joint and several liability:** All group members are jointly and severally liable for the group's VAT debts -- a key risk consideration. **Partial exemption in groups:** If any group member makes exempt supplies (e.g. financial services), this can affect the group's ability to recover input VAT -- a partial exemption calculation applies to the group as a whole. **Anti-avoidance:** HMRC can refuse to allow, or can terminate, a VAT group if it is structured to obtain a VAT advantage that is contrary to the purpose of the grouping provisions. **The £90,000 registration threshold** applies to the combined UK taxable turnover of all group members -- if the group as a whole exceeds £90,000, registration (or group registration) is compulsory.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.