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Asavin Wattanajantra
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Money Matters
MTD for VAT applies to VAT groups just as it does to single businesses. Here’s how group VAT Returns work, and how to keep digital links across the group.
Published 15 October, 2026 min read Share Copy Link Copied
Asavin Wattanajantra
VAT groups generally have to follow Making Tax Digital (MTD) for VAT, as single businesses do, subject to exemptions and different final-return processes. The representative member must make sure the group’s VAT records are kept digitally, use digital links where relevant data moves between products, and file one VAT Return for the whole group using MTD-compatible software.
Making Tax Digital for VAT has been around since April 2019.
Any individual or business registered for VAT must keep key VAT accounting records digitally and use software to submit their VAT Returns.
Effectively, this has meant most businesses use software for their accounting.
This brings benefits of its own, such as far better insights into business finances compared to attempting to keep accounting records manually.
MTD for VAT applies to VAT groups too, and brings the same rules and requirements.
This article explains how, and looks back at the deadlines that applied to VAT groups.
For more information about all aspects of Making Tax Digital, please visit Sage’s MTD hub.
Here’s what this article discusses:
Download your free (and easily printable) Making Tax Digital checklist and follow the steps to help you with your VAT Return processes
In the same way as to a single business: the group files one VAT Return through MTD-compatible software, with digital links wherever relevant VAT data moves between the products it uses.
So, what is a VAT group?
Sometimes it’s financially sensible for two or more companies (known as bodies corporate), or a company together with the individuals or partnerships that control it, to use just one VAT registration (VAT Notice 700/2).
This is known as a VAT group registration.
In practical terms, it means one member of the group acts as the representative member for VAT purposes. This member is responsible for VAT Returns, plus paying and reclaiming VAT, for all the members of the group.
Here’s how a VAT group works (VAT Notice 700/2):
Another key benefit is that members of the VAT group usually don’t need to account for VAT when making supplies to each other.
How much input tax the group can recover depends on how the group as a whole uses its purchases, and on the supplies it makes outside the group. Partial exemption and other rules may restrict recovery, so check VAT Notice 700/2 and VAT Notice 706.
Group VAT registrations generally have to follow Making Tax Digital for VAT, just like any individual VAT-registered business, subject to exemptions and different final-return processes.
But things are much more complex with VAT groups compared to a standalone VAT business, because there’s typically a lot more data to be gathered for each return.
This might exist in several locations.
Under the rules of MTD for VAT, the required VAT records may sit across several systems in the group. Where relevant electronic data moves between the products that make up the group’s compatible-software arrangement, it must move through digital links.
That data is then used to prepare the VAT Return.
It’s because of issues such as this that HM Revenue and Customs (HMRC) allowed several delays for larger organisations such as VAT groups following the start of Making Tax Digital for VAT in April 2019.
Discover how Sage Accounting can help you get your MTD for VAT submission right, calculate your bill and submit your VAT Return with ease.
Find out more
VAT groups in the original mandation scope, with taxable turnover above the then £85,000 threshold, were deferred to VAT periods starting on or after 1 October 2019. Groups below that threshold came into MTD for VAT from their first VAT period starting on or after 1 April 2022. For groups already in MTD, the digital links soft landing ended for VAT periods starting on or after 1 April 2021; groups joining from April 2022 needed digital links from the start.
Although now passed, there were two key deadlines for Making Tax Digital for VAT when it comes to VAT groups. To stay up to date on the latest deadlines, be sure to visit Sage’s MTD hub, which is updated regularly. For current dates, see Making Tax Digital for VAT deadlines.
This was the deadline by which VAT groups needed to start observing the rules of MTD for VAT.
In other words, it applied for the first full VAT accounting period after October 2019.
This meant that, if the VAT group filed quarterly VAT Returns, and their first MTD for VAT period started in October 2019, the first MTD for VAT Return would have needed to have been submitted in early February 2020.
Larger organisations such as VAT groups got this extension following the April 2019 introduction date because of the typical complexity of their systems, and likely issues arising in getting everything ready in time.
When Making Tax Digital for VAT started, HMRC allowed what was known as the soft landing period.
Businesses could ignore a key part of the digital linking requirement—namely, that manually copying or cutting and pasting data between two locations was prohibited.
As mentioned, when it comes to VAT group registrations, creating a VAT Return can involve collating information from various sources. Therefore, being able to cut, copy, and paste is very useful.
HMRC originally planned for the full digital linking rules to apply to VAT groups from October 2020. Because of the coronavirus pandemic, it extended the soft landing period for all businesses to their first VAT period starting on or after 1 April 2021 (ICAEW).
This meant cutting, copying, and pasting was against the law when it came to key VAT accounting data and preparing the VAT Return. Any businesses caught doing so could be penalised by HMRC.
For those filing group VAT Returns, this came as something of a blow—but HMRC had given group VAT members until April 2021 to prepare.
They’re automated ways of moving data between software, such as an export and import, so nobody retypes or copies and pastes VAT data.
The rules of Making Tax Digital say the relevant accounting data must be stored digitally.
Furthermore, software must be used to send returns or other kinds of updates to HMRC, as required within the MTD rules.
Therefore, if you use more than one piece of software or more than one system, any transfer of relevant VAT data between them must be through a digital link.
It must be possible to automatically transfer the data from one digital location to another.
You might have to click a button to start off this automated transfer, but the key thing is that you’re not doing it manually—perhaps by copying and pasting the data, or even scribbling it into a notebook and then rekeying it into another system.
That said, what’s considered digital linking can sometimes be surprising and a little counterintuitive. Emailing a spreadsheet is fine. You can even pass data to somebody via USB memory stick.
For example, HMRC describes a VAT group where each member exports a monthly summary from its own software into a master spreadsheet, which then connects to HMRC through bridging software (VAT Notice 700/22).
The rules for digital linking for Making Tax Digital for VAT can be found in the VAT Notice 700/22.
MTD for Income Tax, which began in April 2026, has its own digital record-keeping rules. MTD for Corporation Tax was cancelled in July 2025.
Download your free (and easily printable) Making Tax Digital checklist and follow the steps to help you with your VAT Return processes
VAT groups offer a useful way to account for VAT across several businesses.
It can reduce complexity and costs.
But it also brings its own requirements when it comes to legally complying with MTD for VAT’s requirements, and particularly the ban on copying, cutting, and pasting data from one place to another.
However, the benefits of using Making Tax Digital for VAT—and therefore using software for VAT Return submissions—outweigh this extra work.
A VAT group is a single VAT registration covering two or more companies you control, so you submit one VAT Return reporting all the group members’ supplies and acquisitions. Supplies between group members are usually disregarded for VAT.
However, there are some exceptions to this, including some bought-in services, and the cost component for some supplies. This is detailed in Section 7 of VAT Notice 700/2.
There are also certain limitations on what entities can form VAT groups. These are listed in Section 2.2 of VAT Notice 700/2.
Bodies corporate (limited companies, public limited companies, and so on) that are established or have a fixed establishment in the UK, and are under common control. Individuals, partnerships, and Scottish partnerships can join too, but only if they control a UK company in the group. Non-corporate bodies have been able to join since 1 November 2019.
A single VAT registration covering all members of a VAT group. The group is treated as one taxable person, and the representative member files one VAT Return on behalf of all members. To apply, you complete form VAT50/51 and upload it as part of your online VAT registration application.
Submitting a group VAT Return is done just like it is for an individual or business. You need to use software to submit the VAT Return, as per the rules of MTD for VAT.
The software connects to HMRC’s computers across the internet so you can file the VAT Return.
A spreadsheet can be used to compile VAT accounting data for a group VAT Return, provided the digital linking rules above are not broken.
Bridging software can then be used with the spreadsheet to make a VAT Return submission to HMRC.
However, most VAT groups use MTD-compatible software for their VAT accounting, and so are easily able to create the VAT Return based on data already within the system(s).
For step-by-step guidance, see Making Tax Digital for VAT: complete guide.
Yes. All members of a VAT group are jointly and severally liable for any VAT the group owes, even though the representative member files the return (VAT Notice 700/2).
Editor’s note: This article was first published in February 2022 and has been updated for relevance.
Download your free (and easily printable) Making Tax Digital checklist and follow the steps to help you with your VAT Return processes.
Download your free checklist
Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.
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The post Making Tax Digital for VAT groups: Returns and digital links appeared first on Sage Advice UK.
Making Tax Digital for VAT groups: Returns and digital links
MTD for VAT applies to VAT groups just as it does to single businesses. Here’s how group VAT Returns work, and how to keep digital links across the group.
Published 15 October, 2026 min read Share Copy Link Copied
Asavin Wattanajantra VAT groups generally have to follow Making Tax Digital (MTD) for VAT, as single businesses do, subject to exemptions and different final-return processes. The representative member must make sure the group’s VAT records are kept digitally, use digital links where relevant data moves between products, and file one VAT Return for the whole group using MTD-compatible software.
Key takeaways
- VAT groups generally have to follow MTD for VAT, as single VAT-registered businesses do, subject to exemptions and different final-return processes.
- The representative member keeps the group’s VAT records digitally and files one VAT Return for all members.
- Required records can sit across different systems. Where relevant data moves between the products in the group’s software arrangement, it must move through digital links. Copying and pasting isn’t allowed.
- VAT groups above the then £85,000 VAT threshold were deferred to VAT periods starting on or after 1 October 2019. MTD for VAT was extended to all VAT-registered businesses, including smaller groups, from April 2022.
- All group members are jointly and severally liable for the group’s VAT debts.
Making Tax Digital for VAT has been around since April 2019.
Any individual or business registered for VAT must keep key VAT accounting records digitally and use software to submit their VAT Returns.
Effectively, this has meant most businesses use software for their accounting.
This brings benefits of its own, such as far better insights into business finances compared to attempting to keep accounting records manually.
MTD for VAT applies to VAT groups too, and brings the same rules and requirements.
This article explains how, and looks back at the deadlines that applied to VAT groups.
For more information about all aspects of Making Tax Digital, please visit Sage’s MTD hub.
Here’s what this article discusses:
- How does Making Tax Digital apply to VAT groups?
- When did MTD for VAT start for VAT groups?
- What are digital links, and how do they work in a VAT group?
- Final thoughts on MTD for VAT groups
- MTD for VAT groups: FAQs
Download your free (and easily printable) Making Tax Digital checklist and follow the steps to help you with your VAT Return processes
How does Making Tax Digital apply to VAT groups?
In the same way as to a single business: the group files one VAT Return through MTD-compatible software, with digital links wherever relevant VAT data moves between the products it uses.
So, what is a VAT group?
Sometimes it’s financially sensible for two or more companies (known as bodies corporate), or a company together with the individuals or partnerships that control it, to use just one VAT registration (VAT Notice 700/2).
This is known as a VAT group registration.
In practical terms, it means one member of the group acts as the representative member for VAT purposes. This member is responsible for VAT Returns, plus paying and reclaiming VAT, for all the members of the group.
Here’s how a VAT group works (VAT Notice 700/2):
| VAT group | |
| Who can join | Two or more UK-established companies under common control, plus any individuals or partnerships that control a company in the group |
| Who files the VAT Return | The representative member, on behalf of the whole group |
| Supplies between members | Usually disregarded for VAT, with some exceptions for services |
| Who is liable for VAT debts | All members, jointly and severally |
| How to apply | Online, uploading form VAT50/51 as part of the application |
| MTD for VAT | Applies in full: digital records, digital links, and MTD-compatible software |
Another key benefit is that members of the VAT group usually don’t need to account for VAT when making supplies to each other.
How much input tax the group can recover depends on how the group as a whole uses its purchases, and on the supplies it makes outside the group. Partial exemption and other rules may restrict recovery, so check VAT Notice 700/2 and VAT Notice 706.
Group VAT registrations generally have to follow Making Tax Digital for VAT, just like any individual VAT-registered business, subject to exemptions and different final-return processes.
But things are much more complex with VAT groups compared to a standalone VAT business, because there’s typically a lot more data to be gathered for each return.
This might exist in several locations.
Under the rules of MTD for VAT, the required VAT records may sit across several systems in the group. Where relevant electronic data moves between the products that make up the group’s compatible-software arrangement, it must move through digital links.
That data is then used to prepare the VAT Return.
It’s because of issues such as this that HM Revenue and Customs (HMRC) allowed several delays for larger organisations such as VAT groups following the start of Making Tax Digital for VAT in April 2019.
Making Tax Digital for VAT software
Discover how Sage Accounting can help you get your MTD for VAT submission right, calculate your bill and submit your VAT Return with ease.
Find out more
When did MTD for VAT start for VAT groups?
VAT groups in the original mandation scope, with taxable turnover above the then £85,000 threshold, were deferred to VAT periods starting on or after 1 October 2019. Groups below that threshold came into MTD for VAT from their first VAT period starting on or after 1 April 2022. For groups already in MTD, the digital links soft landing ended for VAT periods starting on or after 1 April 2021; groups joining from April 2022 needed digital links from the start.
Although now passed, there were two key deadlines for Making Tax Digital for VAT when it comes to VAT groups. To stay up to date on the latest deadlines, be sure to visit Sage’s MTD hub, which is updated regularly. For current dates, see Making Tax Digital for VAT deadlines.
October 2019
This was the deadline by which VAT groups needed to start observing the rules of MTD for VAT.
In other words, it applied for the first full VAT accounting period after October 2019.
This meant that, if the VAT group filed quarterly VAT Returns, and their first MTD for VAT period started in October 2019, the first MTD for VAT Return would have needed to have been submitted in early February 2020.
Larger organisations such as VAT groups got this extension following the April 2019 introduction date because of the typical complexity of their systems, and likely issues arising in getting everything ready in time.
April 2021
When Making Tax Digital for VAT started, HMRC allowed what was known as the soft landing period.
Businesses could ignore a key part of the digital linking requirement—namely, that manually copying or cutting and pasting data between two locations was prohibited.
As mentioned, when it comes to VAT group registrations, creating a VAT Return can involve collating information from various sources. Therefore, being able to cut, copy, and paste is very useful.
HMRC originally planned for the full digital linking rules to apply to VAT groups from October 2020. Because of the coronavirus pandemic, it extended the soft landing period for all businesses to their first VAT period starting on or after 1 April 2021 (ICAEW).
This meant cutting, copying, and pasting was against the law when it came to key VAT accounting data and preparing the VAT Return. Any businesses caught doing so could be penalised by HMRC.
For those filing group VAT Returns, this came as something of a blow—but HMRC had given group VAT members until April 2021 to prepare.
What are digital links, and how do they work in a VAT group?
They’re automated ways of moving data between software, such as an export and import, so nobody retypes or copies and pastes VAT data.
The rules of Making Tax Digital say the relevant accounting data must be stored digitally.
Furthermore, software must be used to send returns or other kinds of updates to HMRC, as required within the MTD rules.
Therefore, if you use more than one piece of software or more than one system, any transfer of relevant VAT data between them must be through a digital link.
It must be possible to automatically transfer the data from one digital location to another.
You might have to click a button to start off this automated transfer, but the key thing is that you’re not doing it manually—perhaps by copying and pasting the data, or even scribbling it into a notebook and then rekeying it into another system.
That said, what’s considered digital linking can sometimes be surprising and a little counterintuitive. Emailing a spreadsheet is fine. You can even pass data to somebody via USB memory stick.
For example, HMRC describes a VAT group where each member exports a monthly summary from its own software into a master spreadsheet, which then connects to HMRC through bridging software (VAT Notice 700/22).
The rules for digital linking for Making Tax Digital for VAT can be found in the VAT Notice 700/22.
MTD for Income Tax, which began in April 2026, has its own digital record-keeping rules. MTD for Corporation Tax was cancelled in July 2025.
Download your free (and easily printable) Making Tax Digital checklist and follow the steps to help you with your VAT Return processes
Final thoughts on MTD for VAT groups
VAT groups offer a useful way to account for VAT across several businesses.
It can reduce complexity and costs.
But it also brings its own requirements when it comes to legally complying with MTD for VAT’s requirements, and particularly the ban on copying, cutting, and pasting data from one place to another.
However, the benefits of using Making Tax Digital for VAT—and therefore using software for VAT Return submissions—outweigh this extra work.
MTD for VAT groups: FAQs
What is a VAT group?
A VAT group is a single VAT registration covering two or more companies you control, so you submit one VAT Return reporting all the group members’ supplies and acquisitions. Supplies between group members are usually disregarded for VAT.
However, there are some exceptions to this, including some bought-in services, and the cost component for some supplies. This is detailed in Section 7 of VAT Notice 700/2.
There are also certain limitations on what entities can form VAT groups. These are listed in Section 2.2 of VAT Notice 700/2.
Who can form a VAT group?
Bodies corporate (limited companies, public limited companies, and so on) that are established or have a fixed establishment in the UK, and are under common control. Individuals, partnerships, and Scottish partnerships can join too, but only if they control a UK company in the group. Non-corporate bodies have been able to join since 1 November 2019.
What is a VAT group registration?
A single VAT registration covering all members of a VAT group. The group is treated as one taxable person, and the representative member files one VAT Return on behalf of all members. To apply, you complete form VAT50/51 and upload it as part of your online VAT registration application.
How do I submit a group VAT Return?
Submitting a group VAT Return is done just like it is for an individual or business. You need to use software to submit the VAT Return, as per the rules of MTD for VAT.
The software connects to HMRC’s computers across the internet so you can file the VAT Return.
A spreadsheet can be used to compile VAT accounting data for a group VAT Return, provided the digital linking rules above are not broken.
Bridging software can then be used with the spreadsheet to make a VAT Return submission to HMRC.
However, most VAT groups use MTD-compatible software for their VAT accounting, and so are easily able to create the VAT Return based on data already within the system(s).
For step-by-step guidance, see Making Tax Digital for VAT: complete guide.
Are VAT group members liable for each other’s VAT?
Yes. All members of a VAT group are jointly and severally liable for any VAT the group owes, even though the representative member files the return (VAT Notice 700/2).
Editor’s note: This article was first published in February 2022 and has been updated for relevance.
Making Tax Digital for VAT checklist
Download your free (and easily printable) Making Tax Digital checklist and follow the steps to help you with your VAT Return processes.
Download your free checklist
Subscribe to the Sage Advice newsletter
Join more than 500,000 UK readers and get the best business admin strategies and tactics, as well as actionable advice to help your company thrive, in your inbox every month.
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The post Making Tax Digital for VAT groups: Returns and digital links appeared first on Sage Advice UK.