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The VAT Group Management extension for the United Kingdom

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Note

Azure Active Directory is now Microsoft Entra ID. Learn more

You can connect one or more businesses in the United Kingdom to combine value-added tax (VAT) reporting under a single registration number. This type of arrangement is known as a VAT group. You can engage with the group as a member or as the group representative.

Forming a VAT group

VAT group members and the group representative can use the Set Up VAT Group Management assisted setup guide to both define their engagement with the group and create a connection between their Business Central tenants. The group members use this connection to submit their VAT returns to the group representative. The group representative then uses a single VAT return to submit the group's VAT to tax authorities.

Business Central supports intra-group VAT return submissions for companies using Business Central on-premises or online, in any combination, which influences the communication setup between businesses. This article describes various group setups.

License requirements

Participants in the group must be licensed to use Business Central. You can't use guest accounts in VAT groups.

  • To calculate and submit VAT returns, a user must be a full Business Central user.
  • To sign in and do basic tasks, such as create accounts, you need a Dynamics 365 Business Central Team Member license.

Set up a VAT group

The following is the recommended order of steps an administrator uses to set up a VAT group:

  1. Create the setup in Microsoft Entra ID setup for group members.

  2. Share the technical information VAT group members and the group representative need to connect their Business Central tenants. Usually, the group representative has this information, such as the API URL and the name of the VAT group representative's environment the VAT group members submit their VAT data to.

  3. Create users that VAT group members use to authenticate when they connect to the VAT group representative's Business Central. The users must have full user licenses for Business Central.

  4. Run the Set Up VAT Group Management assisted setup guide to connect the VAT group members.

    The VAT group representative must supply certain information to group members to complete their setup. (Learn more in the Set up VAT group members section below.) Make a note of the Group Member ID for each VAT group member. The group representative needs these IDs to add the companies to the VAT group.

  5. Set up the VAT group management extension in the VAT group representative's Business Central using the Set Up VAT Group Management assisted setup guide.

Note

To connect to the VAT group representative, group members must have a user account that can access the VAT group representative's Business Central. The VAT group representative must create at least one user for this. However, for security reasons we recommended that they create a user for each VAT group member, which can be a system user account that is not related to an actual person. Make sure to distribute the user credentials to VAT group members in a secure way.

Microsoft Entra ID setup for group members

When the VAT group representative is using Business Central online or on-premises, VAT group members must use Microsoft Entra ID to authenticate users when they submit VAT returns to the VAT group representative. For Business Central on-premises, members must configure single sign-on. Learn more at Configure Microsoft Entra authentication with WS-Federation.

If the VAT group members are also using Business Central online, the member can authenticate with the designated user credentials and the sign-in information provided by the group representative. Learn more in the Set up VAT group members section below.

VAT group members who have Business Central on-premises must set up an app registration in Microsoft Entra ID for the VAT group representative's Business Central tenant. The app registration enables the VAT group representative's Business Central online to authenticate the group member. Learn more at Quickstart: Register an application with the Microsoft identity platform.

When the VAT group member's administrator creates the app registration in Microsoft Entra ID, they must specify the following information.

  • In the Authentication section, add Web as a platform, and use the following Redirect URL: https://businesscentral.dynamics.com/OAuthLanding.htm.
  • In the Authentication section, in the option to select Supported account types, select Accounts in any organizational directory (Any Microsoft Entra directory - Multitenant).
  • In the Certificates & secrets section, create a new client secret and note the value. The VAT group members need the secret when they set up the connection to the group representative.
  • In the API permissions section, add permissions to Business Central. Enable delegated access to Financials.ReadWrite.All and user_impersonation.
  • In the Overview section, note the Application (client) ID. The VAT group members need the ID when they set up the connection to the group representative.

Group API setup

The VAT group representative creates and supplies an API to group members. The members use this API to connect to the representative's Business Central tenant and submit VAT returns. VAT group members often use Business Central in separate Microsoft Entra tenants. For that reason, setup is needed to connect the VAT group member and the representative's Business Central.

Note

This setup requires credentials for an administrator account that has a full user license for Business Central.

  1. In the Business Central admin center for the representative's tenant, choose the Environments tab.
  2. Choose the representative's environment.
  3. In the Details section, copy the URL.
  4. Open Notepad, and paste the URL. Replace https://businesscentral.dynamics.com with https://api.businesscentral.dynamics.com/v2.0.

Set up VAT group members

VAT group members connect to the representative by calling a web service on the VAT group representative's tenant. The caller must be authenticated using OAuth2. When the VAT group management extension is set up, members are asked to authenticate to the VAT group representative, during which an access token is generated and saved. This access token is used when submitting VAT returns to the VAT group representative.

Important

The member companies in the VAT group do not need to connect to HMRC because they report through the group's representative.

Before VAT group members start their setup (listed below), they need to contact the VAT group representative for the following information about their Business Central tenant:

  • The API URL
  • The name of their company
  • Sign in credentials for the dedicated user

  1. In the top right corner, choose the Settings Settings. icon, then choose the Assisted setup action.

  2. Choose the Set Up VAT Group Management action.

  3. In the VAT Group Role field, choose Member then Next.

  4. Copy the value of the Group Member ID field, and then share it with the VAT group representative so they can add your company as an approved member of the group.

  5. In the Group Representative Product Version field, specify the version of Business Central the representative is using.

  6. In the API URL field, enter the API URL provided by the VAT group representative. Typically, the URL is formatted as follows: https://api.businesscentral.dynamics.com/v2.0/[TENANT-ID]/[ENVIRONMENTNAME]. For example, https://api.businesscentral.dynamics.com/v2.0/aaaabbbb-0000-cccc-1111-dddd2222eeee/UKRepresentative.

  7. In the Group Representative Company field, enter the company name of the VAT group representative, such as, CRONUS UK Ltd.

  8. In the Authentication Type field, choose OAuth2. If the VAT group representative is using Business Central online, enable the Group Representative Uses Business Central Online toggle, and then choose Next.

    Then, follow the steps in either the VAT Group Representative uses Business Central online or VAT Group Representative uses Business Central on-premises section below.

VAT group representative uses Business Central online

  1. Enter the user credentials provided by the VAT group representative, and add the required permissions to generate the access token.
  2. Choose the VAT report configuration you use to submit VAT returns to the UK tax authorities.

After you complete the setup, Business Central will create a new configuration based on this choice that enables you to submit VAT returns to the VAT group representative.

VAT group representative uses Business Central on-premises

  1. Enter the user credentials provided by the VAT group representative and choose Next.
  2. In the Client ID field, specify the client ID from the app registration in Microsoft Entra ID setup for group members.
  3. In the Client Secret field, specify the client secret from the app registration in Microsoft Entra ID.
  4. In the OAuth 2.0 Authority Endpoint field, enter https://login.microsoftonline.com/common/oauth2.
  5. In the OAuth 2.0 Resource URL field, enter https://api.businesscentral.dynamics.com/.
  6. In the OAuth 2.0 Redirect URL field, enter https://businesscentral.dynamics.com/OAuthLanding.htm.
  7. When you've specified the various fields, choose Next, and then confirm the authentication connection to generate the access token.
  8. Choose the VAT report configuration you use to submit VAT returns to the UK tax authorities.

Set up the VAT group representative

Note

For on-premises, Business Central supports only a single tenant instance of the group representative.

Important

The representative company must enable the HMRC VAT Setup service connection on the Service Connections page. Representatives must also download VAT return periods from HMRC.

  1. In the top right corner, choose the Settings icon Settings., and then choose the Assisted setup action.
  2. Choose the Set Up VAT Group Management action.
  3. In the VAT Group Role field, choose Representative to act as the VAT group representative, then choose Next.
  4. In the Group Settlement Account field, specify the settlement account used for the group member VAT tax amounts. This account should have Assets as the Account Category.
  5. In the VAT Settlement Account field, specify the account you use for VAT settlements. This account should have Liabilities as the Account Category.
  6. In the VAT Due Box No. field, specify the box that represents the total VAT amount due from a VAT group submission.
  7. In the Group Settlement General Journal Template field, specify the general journal template used to create the document with which the group representative posts the group VAT to the settlement account.
  8. The Approved Members field shows the number of group members set up to submit VAT returns to the group representative. To add new members, choose the number to open the VAT Group Approved Members page and add the following information:
    1. In the Group Member ID field, enter an identifier for the group member, as displayed during the group member setup (learn more in the VAT group member setup section above).
    2. In the Group Member Name field, specify the name of the group member.
    3. In the Company field, specify the company from which the group member submits VAT returns in Business Central, such as, CRONUS UK Ltd.
    4. Specify contact details for the company.

Use the VAT group management features

VAT group members use the standard processes to prepare VAT returns. The only difference is members must choose the VATGROUP report version in the VAT Return page to submit the VAT return to the VAT group representative rather than the authorities. Learn more at About the VAT Return report.

Note

VAT group members can correct submitted VAT returns as long as the group representative has not released the VAT return for the group. To make a correction, the VAT group member must create a new VAT return for the VAT return period and submit it to the VAT group representative. On the VAT group representative's side, the member's latest VAT return replaces the previous and is included on the VAT Returns page.

The following sections describe the tasks that VAT group representatives must do to file the group VAT return.

Review VAT member submissions

The VAT Group Submissions page lists the VAT returns that members have submitted. The page serves as a draft location for the submissions until the VAT group representative includes them in a VAT return for the group. The representative can open the submissions to review the individual boxes containing the amount reported by each VAT group member.

Tip

On the VAT Return Periods page, the Group Member Submissions field shows how many returns members have submitted. To ensure that this number is up to date, choose the Get VAT Returns action.

Create a group VAT return

To report VAT for the group, on the VAT Returns page, create a VAT return for your company only. Afterward, include the most recent VAT submissions from VAT group members by choosing the Include Group VAT action.

When the group representative has submitted the group's VAT return to the authorities, the representative then normally runs the Calculate and Post VAT Settlement action. This action closes open VAT Entries and transfers amounts to the VAT settlement account. Currently, this action doesn't take the group submissions into account. Only the VAT entries of the VAT group representative company are posted. The VAT group member submission amounts must be posted using the Post Group VAT Settlement action.

Important

The VAT group functionality is only supported in those markets where Business Central uses a VAT framework that consists of VAT returns and VAT return periods. You cannot use VAT groups in markets with other implementations of local VAT reporting, such as Austria, Germany, Italy, Spain, and Switzerland.

Issue with enabling Multifactor Authentication (MFA)

If you get an error message related to authorization during the renewal of the OAuth2 Token on the VAT Report Setup page after you enable MFA, complete the following steps.

  1. Sign in to the Azure Portal as an Authentication Administrator.
  2. Go to the Microsoft Entra ID.
  3. Browse to Users, and then select the user you want to perform an action.
  4. Select the Authentication methods and at the top of the page, select Require re-register multifactor authentication.
  5. Go back to Dynamics 365 Business Central and select to renew the token from the VAT Report Setup.

This should be a onetime setup after you enable multifactor authentication for the user selected in VAT Report Setup.

See also

United Kingdom Local Functionality in the British Version
Making Tax Digital in the United Kingdom
Work with VAT on Sales and Purchases
Set Up Value-Added Tax
Work with VAT on Sales and Purchases
Consolidating Financial Data from Multiple Companies

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