HMRC’s U-turn on VAT Group registration delays

HMRC issued guidance in November last year that meant businesses waiting for a VAT group registration to be processed had to continue submitting VAT returns using previous registration numbers.

This decision created additional and unnecessary record-keeping due to delays caused by HMRC.

We are happy to announce that HMRC have confirmed that this guidance has now been scrapped and businesses can treat the application as provisionally accepted on the date it was submitted online, or the date that it was received in the post by HMRC.

From that date, VAT for the group members can be accounted for by the representative member only and supplies between group members can be ignored. If group members have an existing VAT registration, they should not submit any VAT returns. Learn more about how to check if a business is VAT registered.

HMRC has confirmed it will not take any recovery action if automated assessments and default surcharges are issued, but it’s important to note that HMRC should be notified in these events to ensure they are not pursued. Any surcharges will disappear once the group is processed and in place, which means that apart from halting recovery action there isn’t anything else that needs to be done. If for whatever reason the group registration is not accepted, then we would expect that the default surcharges covering the period of the group application would be withdrawn.

Glenis Gibbs, senior manager comments “It is frustrating for advisors and clients alike when delays are caused by backlogs at HMRC. I am however really pleased that HMRC have allowed a sensible solution for delays in group applications”.

For more advice, contact our VAT team today.