group vat registrations are odious inventions - why?
- they make the accounting super-complicated because you do one consolidated vat return after manually adding three sets of books together
- The VAT is paid from one company
- so you then have to do journals to allocate the vat payment to three companies.
- HMRCy secretly love it because if ANY of the entities goes titzup they can recover 100% of any VAT liability from ANY of the entities in the group.
- If one company in the Group is flogged off to a private equity house you can imagine the entries.
- you only have one vat number spread across 3 companies - see my previous point
- as you only have one number for several companies some suppliers will query it if they see the same number from different group companies
- does it have advantage? YES it does - you have 2 companies in a group, and want to get a vat number for a third so you can raise a massive invoice? - it's simples to add the newco to the existing group without all 8a11ache of doing a new vat registration and convincing HMRC you are not a fraudster.
Does any of this admin cause problems for the company directors? NO
Does any of this admin cause problems for the accountants? YES
Whose idea was it? HMRCy
Who pays for all the admin? the accountants