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VAT

Expert commentary and practical guidance from ICAEW related to VAT under the UK tax regime.

In this section

Features and articles

VAT registration

You must register your business for VAT with HM Revenue and Customs (HMRC) if its VAT taxable turnover is more than £85,000.

Starting to export

You can post goods abroad if your business gets small orders from overseas. For bigger orders, most businesses use a courier or freight forwarder. What you need to do depends on whether you’re exporting within the EU or outside the EU.

VAT record keeping

VAT-registered businesses must keep records of sales and purchases, keep a separate summary of VAT called a VAT account and issue correct VAT invoices.

Starting to import

Most businesses use a courier or freight forwarder to import goods from overseas. What you need to do depends on whether you’re importing from within the EU or outside the EU.

VAT Cash Accounting Scheme

With the Cash Accounting Scheme you pay VAT on your sales when your customers pay you, and reclaim VAT on your purchases when you have paid your supplier.

VAT Annual Accounting Scheme

Usually, VAT-registered businesses submit their VAT Returns and payments to HM Revenue and Customs 4 times a year. With the Annual Accounting Scheme you make advance VAT payments towards your VAT bill - based on your last return (or estimated if you’re new to VAT), and submit 1 VAT Return a year.

VAT Flat Rate Scheme

With the Flat Rate Scheme you pay a fixed rate of VAT to HMRC, you keep the difference between what you charge your customers and pay to HMRC but you can’t reclaim the VAT on your purchases - except for certain capital assets over £2,000.

VAT Margin Scheme

VAT margin schemes tax the difference between what you paid for an item and what you sold it for, rather than the full selling price. You pay VAT at 16.67% (one-sixth) on the difference.

Webinars and recordings

TAXtalk April 2018

This month the panel discusses MTD for VAT regulations, MTD for income tax now it has moved into public beta, and new changes to UK based agents.

Demystifying MTD the VAT requirements

First broadcast on 16th January 2018. HMRC's vision for a digital tax system is well underway. Join the Tax Faculty as they talk through the current state of play and explain what we know so far about the requirements for VAT.

OTS VAT Project

In this webinar, Nigel Mellor and Paul Morton of the Office of Tax Simplification discuss the current VAT Simplification review

VAT Update

Nick McChesney FCA considers some of the more significant recent developments in the VAT world.

Practical guidance

TAXguide 21/17: The tax implications of Brexit

Although many of the implications of Brexit are currently unknown, VAT and customs duties are likely to be affected. This guide outlines the potential tax consequences. This guide was updated following the publication on 23 August 2018 of guidance from HMRC as to what will happen if there is no Brexit deal.

TAXguide 02/18: Demystifying MTD - the VAT requirements

In TAXguide 02/18, Sarah Ghaffari answers a selection of the key questions raised by viewers of the Tax Faculty webinar ‘Demystifying Making Tax Digital: the VAT requirements’, broadcast on 16 January 2018. Read a summary here, ICAEW members can download the full guide.

TAXguide 23/17: VAT MOSS

In TAXguide 23/17, Neil Gaskell explains the changes introduced on 1 January 2015 to the VAT rules for business to consumer supplies of digital services within the EU. Read a summary here, Tax Faculty members can download the full guide.

TAXguide 04/09

Money laundering: supplementary guidance for the tax practitioner

Abbey Tax FAQs

Questions and answers on UK tax issues and trends from the ICAEW Tax and VAT Helpline, a subscription service provided by Abbey Tax.

Abbey Tax FAQs are correct at the time of going to press. To check current validity, please call the ICAEW Tax and VAT Helpline.

The Library & Information Service provides a collection of eBooks as a benefit of membership. Please log in to access these titles. If you are unable to access an eBook, please see our Help and support or contact library@icaew.com.

Value added tax 2

This second chapter on VAT explains how the tax is administered by HMRC, as well as a number of schemes which simplify the VAT system.

Value added tax 1

A chapter setting out the essential principles of VAT, as set out in the Value Added Tax Act 1994 and subsequent Finance Acts.

Scope and rates of value added tax

Short summary of what is chargeable for VAT in the UK, who constitutes a taxable person and how much tax is paid at different rates of VAT.

VAT administration, appeals and interest

A high level overview of the framework of VAT administration covering appeals and the interest charged on VAT recovered through the raising of an assessment.

Registration and de-registration

Briefly explains who has an obligation to register for VAT with a worked example for a small business. It also notes the pros and cons of voluntary VAT registration.

Exports

An overview of exporting from the UK. The chapter covers VAT treatment of direct and indirect exports, customs and excise, and the different types of export declaration.

Recovery of VAT cross-border

This chapter explains the schemes for businesses recovering VAT incurred within the EU.

The general VAT rule as they apply to property-related supplies

This chapter outlines the UK VAT rules for the supply of property, including the tests for goods or services, time and value of supply, and supplies which span a change in the VAT rate or liability for tax.

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ICAEW Rep 62/18

ICAEW's Tax Faculty responds to the VAT registration threshold call for evidence published by HM Treasury on 13 March 2018.

ICAEW Rep 31/18

VAT Postponed accounting letter to FST

ICAEW REP 29/18

MTD - Interest harmonisation and sanctions for late payment

Useful links

Some resources that we link to may pre-date the latest amendments to the relevant tax regulations. While these links contain useful information, please treat them with appropriate caution.

Software suppliers supporting Making Tax Digital for VAT

List of companies who are supplying suitable software to support the MTD for VAT pilot. These suppliers have tested their products in HMRC's test environment and have already demonstrated a prototype of their software to HMRC.

VAT Notice 700/22: Making Tax Digital for VAT

Notice giving updated guidance on digital record keeping and return requirements of MTD for VAT. It explains the digital records that businesses must keep, ways to record transactions digitally in certain special circumstances, and what counts as ‘functional compatible software’.

KPMG Indirect tax rates table

Table from KPMG providing data on indirect tax rates around the world with brief accompanying notes. A separate interactive Tax rates tool allows you to compare tax rates by country or region.

VAT Information Exchange System (VIES)

Useful online tool for checking the validity of EU VAT numbers. The service is provided by the European Commission and uses data supplied by member states.

VAT on GOV.UK

Extensive collection of HMRC guidance on rates, thresholds, managing VAT and VAT returns. Contains specific guidance for builders, car dealers, importers and tour operators.

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Further support

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