VAT group payments: the representative member pays for the whole group

A VAT group is treated as one taxable person for VAT, even though its members remain separate legal companies. One representative member submits the single VAT Return and is responsible for paying or receiving the group's VAT, while all group members can be jointly and severally liable for group VAT debts.

The VAT group is registered in the name of one representative member

HMRC's July 2026 VAT Notice 700/2 says a VAT group has one representative member responsible for completing the single return and paying VAT or receiving repayment on behalf of the group.

Finance should therefore nominate one controlled bank-payment process around the representative member rather than letting each subsidiary send its own VAT payment to HMRC for the same group return.

All group members can be jointly and severally liable

HMRC says all eligible group members are jointly and severally liable for VAT debts incurred during their membership. The representative member handles the return and payment, but liability is not economically isolated to that company.

Group treasury should monitor whether the representative member has enough cash before each VAT deadline. A cash shortage at the representative entity can become a wider group issue.

Document how subsidiaries fund the representative member

Where subsidiaries generate the trading VAT but the representative member makes the bank payment, use an intercompany schedule showing each member's contribution to the group liability. The transfer into the representative member is not external revenue.

Use consistent references such as VAT GROUP FUNDING Q3 and reconcile member balances. This prevents the central VAT payment from creating unexplained intercompany cash movements.

Most intra-group supplies are disregarded for VAT

HMRC says supplies between VAT-group members are normally disregarded for VAT purposes, subject to specified exceptions. The group return therefore does not simply add together independent VAT returns as if the companies were unrelated.

Accounting systems should flag group membership so intercompany invoices do not create VAT cash forecasts that the representative member will never actually pay to HMRC.

Payments on account are tested using the VAT group's total liability

VAT Notice 700/2 confirms that where the group's annual VAT liability exceeds the payments-on-account threshold, the group enters that scheme based on the group liability as a whole. Interim and balancing payments are then made under the representative member's VAT registration.

Large groups need both the normal VAT return calendar and the extra payments-on-account calendar. Central treasury should receive forecasts from every member early enough to fund each date.

Changing the representative member requires banking and tax-process updates

If the representative member changes, update the HMRC group records and internal banking process together. Old payment templates can continue pointing to the former representative company's tax records even after legal responsibility has moved.

Keep the group VAT number, representative-member details, bank account and internal funding agreement in one permanent file. VAT grouping simplifies external filing only when internal cash responsibilities remain clear.

Worked example: Subsidiary A generates £120,000 net VAT payable, Subsidiary B generates £40,000 payable and Subsidiary C has a £30,000 repayment position. The representative member's external group liability is £130,000 before other adjustments, not three separate HMRC payments. Internal funding should reflect each member's contribution to that group amount.

Keep a member-by-member VAT bridge even though the return is consolidated. If HMRC queries one transaction, the representative member needs to identify which subsidiary created it and obtain source documents quickly.

When a company joins or leaves the VAT group, update intercompany funding formulas and standing treasury instructions. The external VAT number can remain a group number while the internal economics change materially.

Use a group VAT funding cut-off several working days before HMRC's due date. Each member should confirm its expected contribution or repayment position by that date so the representative member is not waiting for intercompany cash on payment day. Where one member disputes its internal allocation, the group should still protect the external HMRC deadline and resolve the internal balance separately.

Document how VAT repayments are shared as carefully as payments. If HMRC returns £300,000 to the representative member, that cash may economically belong to several group companies. A repayment-allocation schedule prevents the representative company from appearing richer simply because it is the legal recipient of group VAT cash.

Use the representative member's bank evidence as the external control point at month or quarter end. Member companies can record their internal VAT balances earlier, but the group's VAT liability is not fully settled until the representative member's payment or repayment is reconciled to HMRC.