What Is Group Making Tax Digital and Does It Apply to Your Business?

At a Glance

Group Making Tax Digital applies MTD for VAT requirements to businesses registered with HMRC as a VAT group. Member companies contribute their VAT information to a single group return submitted by the representative member. A correctly configured Business Central setup can help consolidate records, maintain digital data flows and simplify group VAT reporting.

Contact us to find out how Brookland Solutions can support your business in easing the process of submitting and reporting Group VAT returns.

VAT Group Registration in the UK

Making Tax Digital (MTD) has changed how VAT-registered businesses maintain records and submit VAT returns to HMRC. Unless exempt, all VAT-registered businesses must follow MTD for VAT, which means keeping records digitally using compatible software.

But VAT reporting can get more complicated if multiple businesses operate as part of a VAT group. Each of your companies may have its own transactions, finance teams and accounting records, but HMRC treats the VAT group as a single entity for VAT purposes.

This is where Group Making Tax Digital, or Group MTD, brings VAT information from different entities together and allows the representative member to prepare and submit the group’s single VAT return. It can also support MTD’s digital record-keeping and digital link requirements.

If your business already uses Microsoft Dynamics 365 Business Central, you can manage the process more seamlessly. But before exploring MTD for VAT groups, first find out what it means and whether it applies to your business.

What Group Making Tax Digital Actually Means for VAT Groups

Group MTD is not a separate tax regime. Think of it as applying the existing MTD for VAT requirements to businesses registered with HMRC as a VAT group.

A VAT group allows two or more eligible businesses to account for VAT under a single registration number. One organisation becomes the representative member and is responsible for completing the group’s VAT returns and accounting for VAT on behalf of the group.

If your three businesses form one VAT group, HMRC doesn’t expect three separate returns. It expects all three companies’ figures to be brought together in a single group VAT return.

Where VAT group members use different accounting systems and software to maintain VAT records, the required information must pass between those systems, as long as the transfer uses an approved digital link. HMRC accepts methods such as CSV or XML file import and export, automated transfers and API transfers as digital links, provided the data is transferred electronically rather than copied manually between software products.

So if your three-business VAT group uses different sales or purchase ledger software, summary information is exported and passed digitally to the representative member, consolidated and then submitted to HMRC using compatible bridging software.

In the end, it should answer your finance team’s question of, “How did the figures get from each member’s accounting records into the final group return?”

How Group MTD Differs From Standard Making Tax Digital for VAT

For standalone businesses, MTD for VAT is fairly straightforward. But for a VAT group, returns represent multiple legal entities. Here’s where the difference lies:

Standard MTD for VAT

One VAT-registered company maintains its digital VAT records. It has accounting software to calculate the figures required for the return and compatible software to submit them to HMRC.

Group MTD for VAT

More than one business contributes VAT information to one VAT registration. All figures have to be brought together before the representative member submits the group’s single VAT return.

Does Group Making Tax Digital Apply to My Business?

Being part of the same corporate group doesn’t automatically mean the companies form a VAT group. Your corporate group may include multiple entities, each with its own VAT registration number and VAT return. In that case, each VAT-registered entity follows the standalone MTD for VAT requirements separately.

Group MTD for VAT applies when eligible organisations are registered with HMRC as a VAT group and account for VAT using a single VAT registration number.

You may need to consider a Group MTD setup if:

  • Your organisation has an HMRC-registered VAT group
  • Many group members contribute to one VAT return
  • Group members maintain separate accounting records or Business Central companies
  • Figures need to be consolidated before submitting the VAT return

How Does Group MTD Reporting Work in Business Central?

Microsoft Dynamics 365 Business Central includes VAT Group management functionality that connects multiple VAT group members with the group representative and supports group VAT returns.

  • Each entity’s VAT transactions are recorded through the relevant VAT posting setup
  • The group return information is consolidated for the reporting company
  • The representative member uses this consolidated information to prepare the VAT return that represents the VAT group

Brookland Solutions offers Group VAT functionality for Business Central, which is designed to support VAT reporting across multiple legal entities. By properly configuring your Business Central ERP, you can reduce the manual effort involved in reporting.

It provides a clearer process for bringing relevant information together and supports other MTD activities, including retrieving VAT obligations from HMRC and providing updates on return status and submission progress.

What Finance Teams Should Check Before Filing Under Group MTD

Before filing group VAT returns, your finance teams should:

  • Know which companies are included in the VAT group 
  • Confirm which company acts as a representative member
  • Check whether VAT registration information in BC matches the current VAT group arrangement
  • Review how VAT information moves between companies and systems
  • Understand how group members use other finance systems, how their figures reach the system or process used to create the final VAT return
  • Maintain digital links where data is transferred between software products that make up the MTD electronic account
  • Account for acquisitions, disposals and restructuring can change which businesses contribute to a VAT group
  • Check VAT figures against underlying company records before submission

A reliable, correctly configured Business Central setup can help make the process easier to follow, not add another layer of work.

Getting Ready for Group MTD With ERP Support from Brookland Solutions

Brookland Solutions can help businesses review how VAT information is recorded, consolidated and submitted through Microsoft Dynamics 365 Business Central. It starts by treating MTD as more than a tax-related task and building it into your wider financial processes.

We can:

  • Review your existing Business Central setup
  • Help configure Group MTD requirements
  • Improve the flow of information between companies
  • Reduce unnecessary manual steps around VAT reporting

We can also help with older Dynamics environments where MTD compliance may need adjustments, or where you’re moving to a current or supported setup.

Find out whether your current Business Central setup gives your finance teams a clear path from individual company transactions to final MTD submission. Book a consultation to talk to one of our consultants about MTD for VAT groups in Business Central.