View the related Tax Guidance about Registration and deregistration
VAT registration ― procedure
VAT registration ― procedureThis guidance note provides information relating to the VAT registration procedure for persons established in the UK and includes:•points to consider when choosing the most appropriate date for the VAT registration to take effect•guidance regarding accounting for VAT from the date registration takes effect•points to consider when dealing with a late registrationFor information regarding VAT registration in the UK for non-established taxable persons (NETPs), please refer to the Overseas business ― registering for VAT in the UK guidance note. An NETP is any person who is not normally resident in the UK, does not have a UK establishment and, in the case of a company, is not incorporated in the UK.For information regarding the conditions for recovering VAT on costs incurred prior to the date of registration, please refer to the Input tax ― pre-registration, pre-incorporation and post-registration guidance note.Although most applications to register for VAT can (and indeed must) be completed online, professional advice and assistance can add significant value, for example in relation to:•choosing the most appropriate date for the VAT registration to take effect•whether monthly VAT accounting may be appropriate if regular VAT repayments are anticipated•advising on the most appropriate way to account for VAT from the date of registrationVAT registration ― how to register; Register for VATThe HMRC online VAT registration service is generally quicker than applying by paper, particularly if the application can be processed without the need for manual intervention by HMRC. HMRC expects
VAT registration and deregistration ― overview
VAT registration and deregistration ― overviewThis guidance note is intended to provide an overview of the topic of VAT registration and deregistration.For in-depth commentary on registration and deregistration, see De Voil Indirect Tax Service Division V2.1.Key considerations associated with VAT registration and deregistrationThere are a number of key VAT areas to consider when registering and deregistering for VAT. The table below summarises many of these and also links to more detailed guidance on each of these subjects:Area to considerDescriptionGuidanceCompulsory VAT registrationVAT registration may be required on a compulsory basis. For UK established businesses, a compulsory registration requirement arises when the VAT registration threshold is breached either under the historic or future tests. Non-established taxable persons do not benefit from a VAT registration threshold. It is essential to be aware of when a registration requirement arises and of the implications that followVAT registration ― compulsoryVoluntary VAT
Input tax ― pension schemes
Input tax ― pension schemesThis guidance note looks at VAT recovery associated with pension schemes for both employers and pension fund trustees. For an overview of input tax more broadly, see the Input tax - overview guidance note.For in-depth commentary on the legislation and case law in this area, see De Voil Indirect Tax Service V3.407C.VAT recovery and pension schemes - the basicsThere are a variety of different means by which an employer may provide pensions to its employees. These include:•insurance based schemes where retirement benefits are secured through an insurance policy•unfunded schemes where no specific funds are set aside to pay pensions•schemes where the employer provides for the payment of pensions by a segregated reserve fund in the balance sheet, represented by specific assets•funded pension schemes where the pension contributions are vested in pension scheme trusteesThe first three categories above present no major unique challenges for VAT recovery. Costs are incurred by the employer and VAT may be recovered in line with the normal input tax rules. In relation to the fourth category, it is possible for an employer to act as sole trustee of its pension fund. This also limits the complexity of the VAT issues that arise since all supplies received in connection with the fund are received by the employer. However, the employer must still consider whether the fund is undertaking any exempt or non-business activities as these will normally restrict the amount of VAT which can be recovered. Where there
Trading as a partnership
Trading as a partnershipThis guidance note provides an overview of the VAT implications affecting businesses that trade as a partnership.IntroductionThe Partnership Act 1890, s 1(1) provides the following definition of a partnership:1)“Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.2)But the relation between members of any company or association which is ―a)registered under the Companies Act 2006, orb)Formed or incorporated by or in pursuance of any other Act of Parliament or letters patent, or Royal Charteris not a partnership within the meaning of this Act.”De Voil Indirect Tax Service V2.110A partnership is an unincorporated association in which the agreement between the parties is such that the relationship between themselves and third parties is governed by the Partnership Act. The existence of a partnership is a matter of fact and usually has the following elements:•there must be a business•the business must be carried on by two or more persons carrying on a business in common with a view to making a profit•the persons share any net profits and losses arising from the business activities•the parties have the power individually, by actions or words, to legally bind other members of the firm in relation to its dealing with third partiesIn Scotland a partnership is a legal person distinct from the partners who compose it. See VATDSAG04350 for more information on Scottish partnerships.From a VAT perspective the partnership itself will be treated as the
Place of supply of services ― intermediaries
Place of supply of services ― intermediariesThis guidance note looks at the special place of supply rules that apply to intermediary services.For an overview of VAT and international services more broadly, see the International services ― overview guidance note. For information on agency and its VAT implications more broadly, see the Supply and consideration ― agents, agency and principals guidance note.In-depth commentary on the legislation and case law that applies to intermediaries for the purposes of the place of supply of services can be found in De Voil Indirect Tax Service V3.195. What is the place of supply of intermediary services?The place of supply of intermediary services will depend on whether the intermediary service is supplied business to business (B2B) or business to consumer (B2C).B2B intermediary services fall under the general rule for the place of supply of services and are therefore supplied where the customer belongs. However, B2C supplies of intermediary services are covered by a special place of supply rule. These are taxed in the same place as the supply to which the intermediary service relates (ie the underlying arranged supply). For discussion of whether a supply is B2B or B2C and for the general rule, see the Place of supply of services ― the general rule, relevant business persons and belonging guidance note.What are intermediary services?Intermediary services in the context of the place of supply of services rules are characterised by making arrangements for a supply by or to another person.
TOGC ― other related issues
TOGC ― other related issuesThis guidance note looks at a number of issues associated with transfers of going concerns (TOGCs), specifically:•the capital goods scheme (CGS)•VAT registration entitlements / obligations•VAT numbers•transferring VAT records•VAT groupsFor an overview of TOGCs more broadly, see the TOGC ― overview guidance note.In-depth commentary on the legislation and case law can be found in De Voil Indirect Tax Service V2.226.How does a TOGC impact on capital goods scheme obligations?The CGS is covered generally in the Capital goods scheme (CGS) ― overview guidance note. Broadly, it provides that for certain ‘capital items’, it’s necessary to monitor ‘use’ over a period of time to ensure that the VAT recovery initially obtained reflects the actual use of the item over a period of time. For example, if a business bought a building from which to make fully taxable supplies, it could recover input tax in full. However, if the next year the business model changed to fully exempt, the full VAT recovery wouldn’t reflect the actual use of the building. This is why the CGS exists to the extent that the use of the capital items changes during that period, it will be necessary to make adjustments to VAT recovery (CGS adjustments).If a capital item is transferred as part of a TOGC, the new owner will be required to take over the CGS adjustments for any remaining intervals. Purchasers therefore must confirm with the seller whether any of the items are capital items for
Time of supply (tax points)
Time of supply (tax points)This guidance note provides an overview of the main tax point rules for goods and services.Why are tax points important?The tax point determines the date upon which a business is required to account for output tax to HMRC and it is also the point at which input tax can be recovered by the customer. The tax point rules for goods and services are different and special rules apply to certain types of supply and care needs to be taken to ensure that the correct rules are applied.Failure to account for output tax in the correct VAT return period can result in the imposition of interest and possibly penalties if the business is deemed to be careless or deliberate when failing to account for VAT correctly, see the Penalties for inaccuracies in returns ― overview guidance note.The tax point also helps to determine the date that a business exceeded the VAT registration threshold and is required to register for VAT; it can also help to determine whether a business is still required to be VAT registered. See the VAT registration and deregistration ― overview guidance note. When are tax points created?It should be noted that there can be more than one tax point created in relation to a supply; for example, if the customer pays a deposit before the goods / services are supplied. This is deemed to be an advance payment and VAT will be due on the amount of the deposit.It should be noted
Holding companies ― setting up a management services arrangement
Holding companies ― setting up a management services arrangementThis guidance note looks at some practical points that a holding company should consider when setting up a management services arrangement.When shares are acquired in a subsidiary (or subsidiaries), it is common for a holding company to be set up as an acquisition vehicle. Often this acquisition vehicle will decide to provide taxable management services to the subsidiary (or subsidiaries) in order to try to secure VAT recovery on the acquisition costs (such as professional fees).For an overview of VAT and holding companies generally, see the Holding companies ― overview guidance note. See also the following guidance notes for discussion of some of the key principles associated with holding companies and VAT recovery:•Holding companies ― VAT status of activities•Holding companies ― is there a direct and immediate link?•Holding companies ― who is the recipient of the supply?•Holding companies ― VAT groupingPractical points ― management services arrangementsFrom a VAT perspective, the
Weekly tax highlights ― 22 January 2024
Weekly tax highlights ― 22 January 2024Direct taxesNational Insurance and Social Security: workers moving between the UK and EU, Gibraltar, Iceland, Liechtenstein, Norway, or SwitzerlandThe following guidance has been updated to reflect the implementation of the new Social Security Coordination Convention between the UK and Iceland, Liechtenstein, and Norway:•Paying social security contributions if you're coming to work in the UK from the EU, Gibraltar, Iceland, Liechtenstein, Norway, or Switzerland•Paying National Insurance if you're going to work in the EU, Gibraltar, Iceland, Liechtenstein, Norway, or SwitzerlandSpecial rules apply where a worker is in scope of the social security coordination provisions of the Withdrawal Agreement, and does not satisfy the conditions for applying for a certificate of coverage to pay national insurance (NI) in the UK whilst working in the EU or social security contributions in an EU country whilst working in the UK, but wish to remain liable to pay NI or social security in the respective country. In such instances, HMRC and the social security authority in the EU country can agree to this, but they will only do so in exceptional circumstances and a certificate of coverage must be applied for from HMRC or the relevant EU social security authority as applicable.InternationalOECD: Zambia joins Global Forum as 39th African memberMembers of the Global Forum include all G20 countries, all OECD members, all international financial centres and a large number of developing countries.Like all other members, Zambia will participate on an equal footing to combat offshore tax
VAT registration ― compulsory
VAT registration ― compulsoryThis guidance note provides information relating to when a person is required to register for VAT on a compulsory basis. The VAT registration ― voluntary guidance note provides information relating to when a person is entitled to register for VAT on a voluntary basis. The VAT group and divisional registration ― overview guidance note provides information on VAT group and divisional registration. For detailed commentary on registration and deregistration, please refer to De Voil Indirect Tax Service V2.1.When may VAT registration be required on a compulsory basis?HMRC can issue an assessment for underpaid VAT covering a period of up to 20 years to a taxable person that has either not registered for VAT at all or not registered for VAT on time. This means that monitoring when and whether a compulsory registration requirement arises is an integral part of good governance. VAT registration may be required on a compulsory basis as a result of:•supplies of goods which the supplier, or a predecessor, has claimed, or is intending to claim, a repayment of VAT•taxable supplies by a person established in the UK•buying in services from outside the UK•relevant acquisitions of goods in Northern Ireland•acquiring a business as a going concern•taxable supplies by a person not established in the UKVATA 1994, Schs 1–3AThe activities for which registration is required as a result of supplies of goods which the supplier, or a predecessor, has claimed, or is intending to claim, a repayment of
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