The VAT grouping rules, guidance from HMRC and cases on the effect of a VAT group create VAT simplicity but commercial complexity. Grouping creates joint and several liability for VAT purposes, but without imposing corresponding commercial agreements or indemnities. Further, the impact of a VAT group on claims for overpaid VAT remains open to challenge. These uncertainties can be limited, if not eliminated altogether, by relatively straightforward VAT grouping agreements entered into at the creation of the group, or at any time during its existence. Taking this simple step may protect VAT group members from costly disputes in the future.
