VAT meaning

Basic terms At the outset, assess whether overage suits the transaction. Your client might be better protected by agreeing a higher purchase price or by entering into a conditional contract instead. Overage provisions can be intricate and expensive to negotiate. If overage is to be applied, consider when the seller expects or hopes to receive a further payment and how the buyer could avoid activating the overage. Ensure the overage includes clear definitions of: the overage period (note that, from 6 April 2010, the rule against perpetuities does not apply to most commercial interests and, if no overage period is specified, there is a risk the arrangement could be perpetual) the property that will be subject to the overage any individual units to be sold or constructed, making clear whether parking spaces and other ancillary areas form part of a unit for the overage calculation Include a ‘good faith’ clause, as this may help if the buyer does something unexpected to...

Checklist This Checklist sets out the principal direct and indirect tax considerations that a corporate borrower within the scope of UK corporation tax (a UK corporate borrower) ought to assess both prior to entering into a loan and over the life of that loan... It is designed to be used as a Checklist by the tax adviser to a UK corporate borrower, offering a concise outline of the relevant tax matters and providing space for the adviser to record notes... This Checklist proceeds on the basis that: the borrower is a company within the charge to UK corporation tax in relation to the loan, that is, either a UK tax resident company or a non‑UK tax resident company for which the loan is attributable to its UK permanent establishment (a UK PE), or attributable to the non‑UK resident company’s trade of dealing in or developing UK land; and the borrower and the lender are unconnected parties dealing at arm’s length ...

FORTHCOMING CHANGE related to Making Tax Digital Under the government’s wider MTD programme, and subject to limited exceptions and deferrals, sole traders and landlords will need to provide quarterly digital updates to HMRC using compatible software. Phased entry depends on income: Above £50,000 from April 2026 Above £30,000 from April 2027 Above £20,000 from April 2028 At Budget 2025, the government confirmed legislation in Finance Bill 2026 to take effect from 1 April 2026, clarifying scope and introducing powers to regulate end‑of‑year returns. A consultation from 12 November 2020 to 5 March 2021 considered extending MTD to corporation tax—voluntary from 2024 and mandatory not before 2026—but this did not proceed. In its 21 July 2025 Transformation Roadmap, HMRC stated it will not introduce MTD for corporation tax. The 2020 ten‑year roadmap for digitalising tax administration provides further background. MTD for VAT has applied to all VAT‑registered businesses since April 2022, affecting how records are kept and returns submitted,...

Flowchart This flowchart explains the VAT place of supply rules for services when those services relate directly to land or property...

Thiel-Czerwinke and another (joint liquidators of Courtside Recycling Ltd) v Crabb [2024] EWHC 337 (Ch) What are the practical implications of this case? This ruling underlines the uncompromising obligation on directors to maintain trading records, and accepts that discarding or failing to retain them was, on these facts, a constituent part of the director’s fraudulent design. It also clarifies that once office-holders demonstrate that company assets or cash were transferred to a director, the absence of documents showing that the funds or property were applied for the company’s advantage renders the director liable to repay the whole amount to the company. That outcome applies even though the judge did not doubt that Mr Crabb did in fact use some of the cash when making payments for Courtside... What was the background? Mr Crabb served as the Company’s sole director; the business dealt in scrap metal. For the trading periods from August 2014 to February 2018, the Company submitted VAT returns declaring sales, net of VAT, totalling...

The Prudential Assurance Company Ltd v HMRC [2024] EWCA Civ 300 The Prudential Assurance Company Ltd (Prudential) acted as the representative member of its VAT group. Another company in the group, Silverfleet Capital Ltd (SCL), executed an investment management services contract to provide services to Prudential. Under that contract, SCL was also eligible for a management fee and deferred performance fees once a specified hurdle rate was achieved. Under section 43 of the Value Added Tax Act 1994 (VATA 1994), no VAT was payable on the management fee because they were in the same VAT group. In 2007, SCL exited the VAT group. In 2014 and 2015, the triggers for paying the further deferred performance fee were satisfied and SCL invoiced Prudential for over £9m in total. The question before the Court of Appeal was whether those additional performance fees ultimately constituted consideration for a supply made while both companies were members of the same VAT group or, alternatively, whether the services amounted to a continuous supply of services...

Lycamobile UK Ltd v HMRC [2026] UKUT 74 (TCC) The appellant, Lycamobile UK Ltd (LMUK), marketed a range of ‘plan bundles’ to UK consumers. These packages conferred, for a set duration, allowances or entitlements to use particular telecommunications services and, in some instances, access to additional services. LMUK accounted for VAT on the bundles only when, and to the extent that, the services available under a given bundle were actually consumed in practice. HMRC’s position was that VAT became chargeable at the point of sale of the bundles. The timing mattered because real-world take-up of the credit bundles was relatively modest, so calculating VAT by reference to actual consumption would yield a reduced liability. To resolve the dispute, the tribunals focused on identifying the true nature of the supply made to the customer: was LMUK supplying a right to make use of a credit bundle over the period, or was it supplying the credits as such?...

This Practice Note sets out the particular rules governing VAT on costs that fall to be the subject of either summary or detailed assessment before the High Court. The applicable provisions are contained in CPR PD 44. Entitlement to This is addressed at CPR PD 44, para 2.3 through to CPR PD 44, para 2.6. The party seeking recovery of costs bears responsibility for ensuring that VAT is claimed only if, and only to the extent that, it cannot recover from HMRC the VAT it has incurred (CPR PD 44, para 2.4). if the VAT is recoverable from HMRC, it should not be included in a claim for costs if only a proportion of the VAT is recoverable from HMRC, include only that proportion which is not recoverable from HMRC in the claim for costs The legal adviser’s VAT registration number must appear in a prominent position at the head of every statement, bill of costs, fee sheet, account or voucher...

FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework: In 2027, stamp duty and SDRT are set to be superseded by a single, self‑assessed tax on securities — the securities transfer charge (STC) — to be paid and reported via a new online portal. The STC’s core features are expected to broadly reflect the proposals consulted on in 2023. Finance Act 2026 (FA 2026) confers a power for secondary legislation to let taxpayers trial the digital service, self‑assessing their stamp taxes on securities liabilities and submitting transactions electronically. For further details on the modernisation of stamp taxes on securities, see: News Analyses: Budget 2025—Tax analysis—Stamp and transfer taxes Tax update spring 2025—Stamp taxes on shares modernisation Tax update spring 2025—Tax analysis—Stamp and transfer taxes TAMD 2023—Stamp taxes on shares modernisation TAMD 2023—consultation—stamp taxes on shares Tax Administration and Maintenance Day—27 April 2023—Stamp and transfer taxes The government also consulted on modernising and clarifying...

What is the Pensions Advice Allowance? Following consultation in 2016/17, the government brought in, from 6 April 2017, the Pensions Advice Allowance. It enables eligible pension scheme members to withdraw a fixed sum from their pension pot tax-free to cover holistic retirement advice. At the member’s instruction, the scheme may therefore reduce the value of the member’s pot by the advice fee and pay the funds straight to the member’s adviser. This measure stemmed from the Financial Advice Market Review, which highlighted an advice gap affecting people who require retirement planning support but cannot meet the cost from net-of-tax income or savings. It is available in addition to other existing advice allowances and payment routes for advice. These include adviser charging, which does not permit pension monies to be used to fund holistic retirement advice. For further details, see Other types of pensions advice measures below. The government’s aim is to help those preparing for retirement to use the Pensions Advice Allowance to fund holistic...

1 Legal costs 1.1 The legal costs of [ insert brief description of services, eg obtaining a grant of probate and distributing an estate ] consist of [ two OR three ] principal elements: our fees; outlays we pay on your behalf (often referred to as disbursements) [ ; OR . ] [ costs you may need to pay to another party. ] 1.2 Our charges We apply a fixed-fee structure [ of £[ insert price excluding VAT ] OR ranging between £[ insert price excluding VAT ] and £[ insert price excluding VAT ] depending on [ insert description of the factors that will dictate where in the fixed price range your fees will fall, eg the value and complexity of your matter ] ] . [ If a matter or transaction does not reach completion, we reserve the right to charge for the work undertaken, using our standard charging rate of £[ insert rate...

INSOLVENCY ACT APPLICATION NOTICE Case No: [ insert case number ]. Court: High Court (Business and Property Courts, Insolvency and Companies List (ChD)) OR Business and Property Courts in [ insert location ] OR County Court at [ insert location ] (Business and Property Work). In the matter of [ insert company’s name ] and the Insolvency Act 1986. Parties: [ Insert Applicant(s) ] v [ Insert Respondent(s) ]. Under IR 2016 r 18.23. Parties and addresses: Applicants [ names/addresses ]; Respondents [ names/addresses ]. Application relates to [ details ]. Judge: [ level ]. Venue: [ court/hearing centre ]. Ref: [ number ]. Orders sought: Fix remuneration at £[ insert sum ] plus VAT; disbursements £[ insert sum ]. Costs to be an expense of the [ liquidation/administration ]. Any further order or relief the court considers appropriate. Grounds: witness statement of [ name ], dated [ date ]. Service/notice: [ names/addresses, if any, or none ]. Address for...

Introduction The Criminal Finances Act 2017 (CFA 2017), effective in the UK since 2017, establishes a corporate offence for failing to stop the criminal facilitation of tax evasion. Tax evasion means unlawfully not paying, or paying less than, the taxes due. It commonly occurs through non-declaration or false declaration of liabilities to the appropriate tax authority. Tax evasion is a criminal offence. Responsibility may arise for an individual, for example in respect of income tax or VAT, or for a corporate body, for instance regarding corporation tax. Enclosed, for your review and approval, is a [ n updated ] [ Group ] policy on preventing the facilitation of tax evasion. This policy, which covers all of our businesses, opens with a brief message from [ insert name of relevant individual ] underlining its significance and calling for the personal commitment of every member of staff to put it into practice. It has received formal approval from [ insert name of relevant individual and/or team ]...

This Q&A presumes the beverages are not provided as part of catering. The Value Added Tax Act 1994 (VATA 1994) sets out the UK’s value added tax (VAT) framework. For broader guidance on VAT, consult Practice Notes: What is VAT?, When does VAT apply? and When can a person recover VAT? Zero-rated supplies A zero-rated supply still counts as a taxable supply, despite no VAT being levied on it. Accordingly, it differs from a VAT-exempt supply in VAT terms...

The Commercial Rent (Coronavirus) Act 2022 (CR(C)A 2022) applies to ‘protected rent debts’ which are, broadly: amounts for rent, service charges, interest and value added tax (VAT) payable under a tenancy to which Part II of the Landlord and Tenant Act 1954 (LTA 1954, s 23) applies (including where contracted out), provided that: all or part of the business or the premises were required by coronavirus (COVID-19) regulations to close; and the sums relate to the ‘protected period’, running from 21 March 2020 until the earlier of: the final day the business or premises had to close, or were subject to regulation governing the way the business operated or the use of the premises; and in England, 18 July 2021, and in Wales, 7 August 2021 Accordingly, it is important to determine whether a private education facility falls within the scope of the LTA 1954—which depends on the tenancy satisfying...