Value Added Tax Act 1994
What this means for your business
- Enforced by
- HMRC
- Applies to
- United Kingdom
- On this page
- 15 compliance obligations, 43 practical guides across 7 topics
What you must do
15 compliance obligations under this legislation — 2 can result in imprisonment.
Management duties 2
Stop unregistered non‑UK sellers from offering goods
If you run an online marketplace and you know (or should know) a non‑UK seller has not registered for VAT under Schedule 1A, you must prevent them from listing goods for at least 60 days from the date you became aware, and keep them off the site until they register. Failing to do so makes your platform jointly liable for any VAT the seller should have paid.
Verify and display sellers' VAT registration numbers on your marketplace
If you run an online marketplace where anyone offers goods for sale, you must check that any VAT registration number you receive from a seller is genuine. You then have to make that valid number visible on your site within 10 days (or by the seller’s first sale), and delete any number you discover is invalid within 10 days of learning this.
Notifications 1
Notify HMRC of acceptance of review offer within 30 days
If HMRC offers you a review of a VAT decision, you must let them know you accept the offer within 30 days of receiving it. You cannot accept the offer if you have already appealed the decision to the tribunal. Failing to notify in time (or after an appeal) means HMRC will not carry out the review.
Payments and fees 2
Charge VAT on all taxable supplies
Unlimited fineIf your business supplies goods or services in the UK, you must add the appropriate VAT to the price (unless the supply is exempt) and pass that VAT on to HMRC. This applies to every sale you make as part of your business, so you need to include VAT on invoices and keep proper records.
Pay VAT when removing goods from a fiscal warehouse
Unlimited fineIf your business takes goods out of a VAT‑warehouse (or goods are treated as supplied when removed), you must pay the VAT that becomes due at that moment. The payment must be made by the person removing the goods, or, where excise duty also applies, by the person who pays that duty. This is an immediate payment obligation, not a later filing.
Offences and prohibitions 5
Breach of walking possession agreement
Unlimited fineIf your business owes VAT and HMRC has taken possession of your goods under a walking possession agreement, you must not remove those goods from the premises without HMRC’s consent. Removing or allowing removal of the goods breaches the agreement and makes you liable to a penalty worth half of the VAT amount owed (unless you can show a reasonable excuse).
Fail to keep required gold transaction records
Unlimited fineIf your business does not keep the records or provide the information that the regulations under the Finance Act 1999 require for gold transactions, you commit an offence. HMRC can issue a penalty of up to 17.5% of the value of the relevant gold transactions, and must do so within two years of discovering the breach. A reasonable excuse can avoid the penalty, and you cannot be penalised twice for the same breach.
Give incorrect zero‑rating certificate
Unlimited fineIf you (or your business) provide a certificate to a supplier claiming that a supply is eligible for zero‑rating or reduced VAT when it is not, you commit an offence. You will be liable to pay a penalty equal to the VAT that should have been charged versus the VAT actually charged. A reasonable excuse can be used as a defence, and no further penalty applies if you are already convicted of another offence for the same certificate.
Knowingly facilitate fraudulent VAT evasion
14 years imprisonmentIf you intentionally help, or take steps to help, anyone to cheat on VAT – for example by hiding sales, false invoicing or claiming a credit you aren’t entitled to – you commit a criminal offence. On conviction you can be fined up to three times the amount of VAT involved (or £20,000, whichever is higher) and face up to 6 months in prison on summary conviction, or an unlimited fine and up to 14 years’ imprisonment on indictment.
Unauthorised disclosure of VAT information
2 years imprisonmentIf you reveal VAT registration numbers, business names, addresses, or the value of supplies that you have obtained under the VAT Act – for example to competitors or the public – you commit a criminal offence. On conviction you face an unlimited fine and, if tried in the Crown Court, up to two years’ imprisonment.
Registration and licensing 1
Register for VAT and keep the registration up to date
If your business is based outside the UK but you start making taxable supplies in the UK and you have no UK establishment, you must register for VAT within 30 days. You also have to tell HMRC as soon as you stop making those supplies, if your circumstances change, or if you want the registration cancelled or exempted.
Reporting and filing 4
Claim VAT refund for non‑business Academy purchases
If your Academy buys goods or services (or imports them) and the purchase isn’t for a business activity, you can ask HMRC to refund the VAT you paid. You must submit a claim within four years of the purchase (or a shorter period if HMRC says so).
Claim VAT refund for non‑business supplies to qualifying charities
If your organisation is a qualifying charity and you have been charged VAT on goods or services that are not for a business activity, you can claim a refund from HMRC. You must submit the claim in the format HMRC requires and do so within four years of the supply or import date.
Keep VAT records, submit returns and issue VAT invoices
Unlimited fineIf your business is registered for VAT you must keep proper VAT accounting records, file the required VAT returns and any other information to HMRC, issue a VAT invoice to your customers and pay any VAT you owe by the deadlines set by HMRC. Failure to do so can attract penalties and, in serious cases, criminal prosecution.
Request out‑of‑time VAT review in writing
If you miss the deadline to accept HMRC’s offer of a VAT decision review or to ask for a review, you can still ask for a review later. You must write to HMRC asking for an out‑of‑time review, show you had a reasonable excuse for the delay, and send the request promptly after that excuse ends.
Penalties for non-compliance
8 penalties under this legislation. 2 can result in imprisonment. 8 carry an unlimited fine.
Knowingly facilitate fraudulent VAT evasion
Unlimited fine and/or 14 years imprisonment
Unauthorised disclosure of VAT information
Unlimited fine and/or 2 years imprisonment
Charge VAT on all taxable supplies
Unlimited fine
Pay VAT when removing goods from a fiscal warehouse
Unlimited fine
Breach of walking possession agreement
Unlimited fine
Fail to keep required gold transaction records
Unlimited fine
Give incorrect zero‑rating certificate
Unlimited fine
Keep VAT records, submit returns and issue VAT invoices
Unlimited fine
Practical guidance
Our guides explain how to comply with the requirements above.
Tax & Finance 19
Use VAT Cash Accounting
How Cash Accounting can help your cash flow by paying VAT only when you receive payment from customers. …
How to complete your VAT return
Step-by-step guidance on what to include in each box of your VAT return. Covers boxes 1-9, rounding rules, …
Corporation Tax basics
Understanding and paying Corporation Tax.
Prepare for Making Tax Digital for VAT
What you need to do to comply with Making Tax Digital requirements for VAT, including digital record keeping, …
VAT invoice requirements
Learn what information must appear on a VAT invoice and when different invoice types apply. This guide covers …
Voluntary VAT registration - pros and cons
Understand the benefits and drawbacks of registering for VAT when you're below the £90,000 threshold. Covers who should …
How to charge VAT correctly
Learn how to charge VAT on your sales, choose the right rate, and create compliant invoices. Essential guidance …
Register for Self Assessment
When and how to register for Self Assessment tax.
Reclaim VAT on business purchases
Understand when and how you can reclaim VAT paid on goods and services for your business. Covers evidence …
How taxes work for limited companies
Understanding Corporation Tax, VAT, PAYE, and Self Assessment - how they interconnect and your obligations to Companies House …
Correct VAT return errors
How to fix mistakes on your VAT return and when to tell HMRC. Covers error correction thresholds, adjusting …
Check if you need to register for VAT
Find out if your business must register for VAT based on your taxable turnover. Covers the £90,000 threshold, …
VAT schemes: choosing the right one for your business
A guide to the three main VAT schemes for small businesses: Flat Rate Scheme, Cash Accounting, and Annual …
VAT when selling online to customers abroad
Understanding VAT obligations when selling to overseas customers through your website or online marketplaces. Covers place of supply …
Join the VAT Flat Rate Scheme
How to join the Flat Rate Scheme and calculate your VAT using a fixed percentage of turnover. Includes …
Choose the correct VAT rate
Find out which VAT rate applies to your goods or services - standard, reduced, zero-rated, or exempt. This …
VAT registration
When and how to register for VAT, including mandatory and voluntary registration, what counts as taxable turnover, registration …
Cancel your VAT registration
How to deregister for VAT, including when you must notify HMRC, completing your final VAT return, and accounting …
VAT and tax on exports
Zero-rating exports, evidence requirements, rules of origin, and claiming tariff-free trade under UK agreements.
Sector-Specific 9
Set up equestrian or livery services on your farm
How to comply with VAT, licensing, and insurance requirements when offering livery, riding lessons, or equestrian facilities. Covers …
Set up and run a compliant farm shop
How to register, comply with food safety, and handle VAT when selling produce directly from your farm. Covers …
VAT for hospitality businesses
Understanding VAT rules for restaurants, cafes, pubs, hotels, and other hospitality businesses. Covers food and drink VAT rates, …
VAT for retail businesses
A complete guide to VAT for retailers, covering registration, pricing requirements, retail schemes, invoicing, gift vouchers, returns, loyalty …
Use a VAT retail scheme
How to calculate VAT using a retail scheme if you sell mainly to the public. Explains Point of …
Comply with tipping law in hospitality
How to comply with the Employment (Allocation of Tips) Act 2023 as a hospitality employer. Covers fair distribution …
Product standards and CE marking for the Northern Ireland market
How product standards and marking requirements differ for the Northern Ireland market under the Windsor Framework. Covers CE …
Accommodation regulations for hotels, B&Bs, and short-term lets
Comprehensive guide to UK accommodation regulation covering tourist accommodation registration, short-term lets rules, fire safety for sleeping accommodation, …
Holiday let tax obligations and business rates
Tax obligations and business rates for self-catering holiday accommodation from April 2025. Covers the FHL regime abolition, capital …
Compliance & Legal 5
Submitting VAT returns
How to calculate VAT, choose an accounting scheme, submit returns through Making Tax Digital, pay on time, correct …
Maintain your import records
What import records you must keep, how long to keep them, and how to store them to meet …
Doing business in Northern Ireland: key differences from Great Britain
Comprehensive reference of the key regulatory divergences between Northern Ireland and Great Britain. Covers employment law, equality legislation, …
Approvals and registrations you need before trading
Understanding the approvals, registrations, and licences your business needs before you can legally start trading. Covers universal registrations, …
Pre-trading timeline: when to apply for what
A month-by-month countdown from three months before your trading day, showing when to apply for each registration, licence, …
International Trade 5
Import duties, VAT and payment options
Understand the types of import charges, calculate customs duty and import VAT, use Postponed VAT Accounting, set up …
Trading with Northern Ireland under the Windsor Framework
How UK businesses move goods between Great Britain and Northern Ireland under the Windsor Framework. Covers UKIMS authorisation, …
Windsor Framework: what businesses need to know
An explainer guide to the Windsor Framework for businesses trading between Great Britain and Northern Ireland. Covers the …
Register for the UK Internal Market Scheme
How to apply for UKIMS authorisation to move goods from Great Britain to Northern Ireland with simplified customs …
Selling products in Northern Ireland
How GB businesses can sell products in Northern Ireland under the Windsor Framework's dual regulatory regime. Covers the …
Business Structure 3
Change from sole trader to limited company
How to incorporate your sole trader business as a limited company. Covers the incorporation process, transferring assets, tax …
Stop being self-employed
How to close your sole trader business, notify HMRC, and complete your final Self Assessment tax return. Includes …
Mandatory registrations every business must complete
Step-by-step guide to the registrations every business must complete before trading, regardless of sector. Covers HMRC tax registration, …
Digital & Technology 1
Sections and provisions
218 classified provisions from this legislation.
Duties 14
- s.4 Scope of VAT on taxable supplies.
- s.18D Removal from warehousing: accountability. supply
- s.33C Refunds of VAT to charities within section 33D
- s.33B Refunds of VAT to Academies
- s.39A Applications for forwarding of VAT repayment claims to other member States
- s.42 Local authorities.
- s.77E Display of VAT registration numbers number provided
- s.77BA Joint and several liability: non-UK sellers in breach of Schedule 1A registration requirement
- s.83C Review by HMRC HMRC
- s.83E Review out of time HMRC
- s.83F Nature of review etc person in seeking
- s.99 Refund of VAT to Government of Northern Ireland.
- Schedule 1A Registration in respect of taxable supplies: non-uk establishment time if conditions A
- Schedule 11 Administration, collection and enforcement VAT on its importation
Offences and penalties 8
- s.62 Incorrect certificates as to zero-rating etc.
- s.68 Breaches of walking possession agreements.
- s.69A Breach of record-keeping requirements etc. in relation to transactions in gold.
- s.69D Penalties under section 69C: officers' liability
- s.70 Mitigation of penalties under sections 60, 63, 64 , 67, 69A and 69C.
- s.72 Offences.
- s.83FB Effect of conclusions of review: penalties under Schedule 24 to FA 2021
- s.91 Disclosure of information for statistical purposes.
Powers 38
- Schedule 2 Registration in respect of supplies from other member States
- s.2 Rate of VAT.
- Schedule 3 Registration in respect of acquisitions from other member States
- s.7A Place of supply of services
- s.7 Place of supply of goods.
- Schedule 10 BUILDINGS AND LAND
- s.18E Deficiency in fiscally warehoused goods.
- s.18F Sections 18A to 18E: supplementary.
- s.23A Meaning of “relevant machine game”
- s.24 Input tax and output tax.
- s.25 Payment by reference to accounting periods and credit for input tax against output tax.
- s.26 Input tax allowable under section 25.
- s.28 Payments on account of VAT.
- s.29 Invoices provided by recipients of goods or services.
- s.29A Reduced rate
- s.31 Exempt supplies ....
- s.33A Refunds of VAT to museums and galleries
- s.33E Power to extend refunds of VAT to other persons
- s.34 Capital goods.
- s.37 VAT on importation of goods: reliefs etc
- ... and 18 more powers
Definitions 56
- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. qualifying use houseboat fuel oil
- s.1 Value added tax.
- s.3 Taxable persons and registration.
- s.5 Meaning of supply: alteration by Treasury order.
- Schedule 6 Valuation: special cases car road fuel motor car
- s.6 Time of supply. VAT invoice
- s.9 Place where supplier or recipient of services belongs. the relevant country relevant establishment
- s.15 Meaning of “importation of goods” into the United Kingdom
- s.17 Free zone regulations. free zone goods free zone
- s.18 Place and time of ... supply. dutiable goods warehouse free zone procedure
- s.18B Fiscally warehoused goods: relief. eligible goods
- s.18C Warehouses and fiscal warehouses: services. specified services
- s.18A Fiscal warehousing. Fiscal warehouse shadow director close company
- s.19 Value of supply of goods or services.
- s.23 Value of supplies involving relevant machine games
- s.26A Disallowance of input tax where consideration not paid
- s.26AB Adjustment of output tax in respect of supplies under section 55A
- s.26B Flat-rate scheme
- s.33D Charities to which section 33C applies Palliative care charity medical professional Air ambulance charity
- s.33 Refunds of VAT in certain cases.
- ... and 36 more definitions
Exemptions 35
- s.5A Supplies of goods facilitated by online marketplaces: deemed supply
- Schedule 8 Zero-rating
- s.8 Reverse charge on supplies received from abroad.
- Schedule 13 Transitional provisions and savings
- s.16 Application of customs enactments
- s.21 Value of imported goods.
- s.26AA Disapplication of disallowance under section 26A in insolvency
- s.27 Goods imported for private purposes.
- s.30 Zero-rating.
- s.43 Groups of companies.
- s.43D Groups: duplication
- s.44 Supplies to groups.
- s.47 Agents etc.
- s.53 Tour operators.
- s.55B Deposit schemes: designation
- s.55 Customers to account for tax on supplies of gold etc.
- s.66 Failure to submit section 55A statement
- s.69B Breach of record-keeping requirements imposed by directions
- s.77F Exception from liability under section 5A
- s.81 Interest given by way of credit and set-off of credits.
- ... and 15 more exemptions
Legislative context
- SI Value Added Tax Regulations 1995 (1995)
- SI The Value Added Tax (Input Tax) Order 1992 (1992)
- SI SI 2019/892, Article 2 (Specified services) (2019)
- SI The Value Added Tax (Charities and Aids for Handicapped Persons) Order 1992 (1992)
- SI The Value Added Tax (Construction of Dwellings and Land) Order 1990 (1990)
Official guidance
Authoritative sources from regulators explaining this legislation.
- Scottish income tax rates (gov.scot) Detailed Guidance
- VAT Notice 700/11 (GOV.UK) Publication
- Cancel VAT registration (GOV.UK) Detailed Guidance