VAT in a group

trg

Registered User
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Hi there,

Just enquiring as to whether if Co. A (a vat registered trading co.) owns Co. B (not vat registered) in full must it charge Co. B vat as normal? It would have no other customers.

Thanks folks
 
Yes but this can be avoided by setting up a VAT group.
Cheers Gordon, thanks for that. It appears to be very beneficial to the non registered entity then as they would be free of vat on the supply from co. A. There is a loss to the exchequer here so it's surprising it's allowed.

In the group situation then can co. A continue to claim vat deduction on its expenses? Which would mean a constant vat refund position.
 
Cheers Gordon, thanks for that. It appears to be very beneficial to the non registered entity then as they would be free of vat on the supply from co. A. There is a loss to the exchequer here so it's surprising it's allowed.

In the group situation then can co. A continue to claim vat deduction on its expenses? Which would mean a constant vat refund position.

I think you misunderstand- In a VAT the whole group is registered.
 
Ah! Thought that there was EU ruling that non registered entities could be in a vat group now. Makes more sense that way alright
 
Ah! Thought that there was EU ruling that non registered entities could be in a vat group now. Makes more sense that way alright

There is indeed such a ruling, and the case was actually between Ireland and the EU Commission (and Ireland won)... I suppose I should have been more clear in explaining what it is you misunderstood...!

The VAT group can have exempt or non-taxable persons/entities in it, but remember what the group registration actually means is that the whole group is treated, for the purposes of accounting for CAT as a single accountable person, with supplies between group members (subject to some specific exceptions) being ignored for VAT purposes.

The entitlement to an input credit for VAT is based on the making of taxable supplies, so in a group scenario the VAT on inputs has to be apportioned between the taxable supplies (i.e. those on which VAT is charged, be it at Zero, 9%, 13.5% or 21%) and exempt or non-taxable supplies.

It would help if you could add context to your specific scenario, but taking it at face value, since you say Company A has no customers besides Company B, and if Company B is not actually generating taxable supplies, then a VAT Group comprising only those 2 companies would not be entitled to deduct any input VAT, as the Group (ignoring supplies intra-group) is not making taxable supplies.

I hope that is a bit clearer!
 
Just enquiring as to whether if Co. A (a vat registered trading co.) owns Co. B (not vat registered) in full must it charge Co. B vat as normal? It would have no other customers.

Why is Co B not registered for VAT and why is it company A's only customer.
 
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