VAT on group of companies

I have recently been appointed as a tax manager of a group of companies. The group comprises a holding company, A ltd, a distribution company and two subs B and C. The two subs are all separately registered for VAT and are fully taxable. The holding company is not VAT registered.

The group is now in the process of setting up a financial services operation to provide finance to customers of the retail companies. The financial services will be provided by a joint venture company, which will be 51% controlled by A ltd with the other 49% held by a company with expertise in the financial services industry.

The group’s strategy has been to employ all staff through A ltd with a term in their contract requiring them to work for other group companies as required and the group wishes to maintain this policy. The payroll, tax, insurance and other employment issues are dealt with centrally by A ltd with reimbursement of exact employment costs made by the other group companies. No administration charge is made. The total annual payroll is around £240k.

Could I get some advice on the current arrangement and any alternative VAT efficient arrangements which the group could consider in future in relation to provision of staff to the group companies, including the new financial services company.