VGROUPS03050 - Eligibility conditions for specified bodies: introduction

Since 1 August 2004, certain bodies corporate - called “specified bodies”-must satisfy two extra conditions in order to be members of a VAT group. This is to prevent partly exempt purchasers of services setting up joint ventures within their VAT group, in order to buy in services without incurring irrecoverable VAT. The joint venture companies are in reality run by and for the benefit of third party suppliers, who exercise control over them in practice. Such practices are abusive because they frustrate the purpose of VAT grouping. VGROUPS03150 and VGROUPS03300 provide further explanation on when a body corporate is considered to be a specified body. VGROUPS03350 and VGROUPS03550 set out the two extra tests that such bodies must satisfy to be eligible: to be within a VAT group, the body must satisfy both tests. VGROUPS03750 should assist you in determining whether the eligibility conditions are satisfied for a specified body.