The next step

HMRC’s guidance at Brief 05/2022

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Dealing with group registration delay

HMRC announcement. HMRC has confirmed that it has a big backlog of applications for VAT group registrations. This can be frustrating for your business. HMRC has issued Revenue and Customs Brief 05/2022 (see The next step ) to explain what you must do if you encounter a delay.

Process. There is no problem increasing your prices by 20% to reflect the fact that you must charge VAT on your sales, assuming they are standard- rated. But you can’t show this as a separate line on your invoices. In other words, you will charge £120 including VAT, rather than £100 + £20 VAT.

Tip. Once you get your VAT group number, you can issue VAT invoices to your customers that need them, usually those that can claim input tax.

Previous registrations. If you or other group members were previously registered as a standalone business, these registrations will be cancelled on the day before your new VAT group takes effect. So, you must not issue invoices with these old VAT numbers, even though you have not received confirmation of your new group number. You will not submit any returns to HMRC after the deregistration date for these registrations.

Rejected. HMRC can reject an application for group registration in order to protect the public revenue. This does not happen often. So, if HMRC subsequently rejects your application, it will reinstall any existing registrations for your businesses that were previously registered. In such cases, the end result will be to act as though a group registration was never requested in the first place.

Trap. If a potential group member was never registered for VAT because its turnover was always below the compulsory registration threshold, it will be able to voluntarily register as a standalone business if it wants to.

For a link to HMRC’s guidance at Brief 05/2022, visit https://www.tips-and-advice.co.uk , Download Zone, year 12, issue 7.