Salted nuts are standard rated, but packets of nuts which are still in their shells are VAT free.
Monthly Archives: May 2026
Reduced VAT rate for children’s meals, tickets, and family attractions
HMRC has announced a temporary reduced VAT rate of 5% will apply to the supply of children’s meals, tickets, and family attractions from 25 June 2026 to 1 September 2026 – Revenue and Customs Brief 5 (2026).
The brief explains a temporary reduced rate of VAT of 5% that will apply to:
- certain supplies of children’s meals
- children’s admission to theatres, cinemas, concerts, exhibitions and shows
- all admission tickets to attractions suitable for families with children
Children’s meals
The reduced rate applies to the supply of children’s meals where both of the following conditions are met:
- the meal is held out for sale only as a meal for children
- the meal is supplied as part of catering services by a restaurant, café or similar establishment for consumption on the premises
Children’s theatre and cinema tickets
The reduced rate applies to children’s admission tickets to:
- cinema screenings
- theatrical performances, shows and concerts
- exhibitions
A children’s ticket is one that is held out for sale only as a right of admission for a child, based on how it is marketed, priced and presented by the supplier.
Attractions
The reduced rate applies to charges made for a right of admission for any customers, regardless of age, to qualifying attractions that are suitable for families with children.
This includes admission to the following venues, unless that admission is already exempt from VAT (for example because it is supplied by a qualifying charity or other eligible body):
- amusement parks and fairs, including water parks and theme parks (excluding pay-per-ride attractions)
- circuses
- adventure parks, including outdoor adventure centres
- museums and similar cultural facilities, including planetariums, heritage sites, nature reserves and botanical gardens
- zoos, aquariums, wildlife parks and farm visitor attractions
- soft play centres, indoor bounce parks and indoor play facilities
- observation attractions, including viewing platforms, towers and observation wheels
Only supplies of admission to these types of attractions fall within the scope of the relief.
This Brief will be relevant to businesses making consumer‑facing supplies to families with children during the school summer holidays. This includes, but is not limited to, the following types of organisations and their advisers:
- restaurants, cafés and similar catering establishments
- cinemas, theatres, exhibition and performance venues
- operators of circuses, fairs, amusement parks, theme parks, adventure parks and water parks, zoos and other animal attractions, soft play centres, observation attractions and certain other family-focused attractions
- museums and similar cultural attractions
VAT Success Stories
Investment company
HMRC denied claims for input tax incurred on costs relating to the potential acquisition of an overseas business and threatened to deregister the plc as it was not, currently, making taxable supplies. Additionally, HMRC contended that even if VAT registration was appropriate, the input tax incurred did not relate to taxable supplies and was therefore blocked.
We were able to persuade HMRC that our client had a right to be VAT registered because It intended to make taxable supplies (supplies with a place of supply outside the UK which would have been taxable if made in the UK) and that the input tax was recoverable as it related to these intended taxable supplies (management charges to the acquired business). This is a hot topic at the moment, but we were able to eventually demonstrate, with considerable and detailed evidence that there was a true intention.
This meant that UK VAT registration was correct and input tax running into hundreds of thousands of pounds incurred in the UK was repaid.
Restaurant
We identified and submitted a claim for a West End restaurant for nearly £200,000 overpaid output tax. We finally agreed the repayment with HMRC after dealing with issues such as the quantum of the claim and unjust enrichment.
Developer
Our property developing client specialises in very high-end residential projects in exclusive parts of London. They built a dwelling using an existing façade and part of a side elevation. We contended that it was a new build (zero rated sale and no VAT on construction costs and full input tax recovery on other costs). HMRC took the view that it was work on an existing dwelling so that 5% applied and input tax was not recoverable. After site visits, detailed plans, current and historical photograph evidence HMRC accepted the holy grail of new build. The overall cost of the project was tens of millions.
Charity
A charity client was supplying services to the NHS. The issue was whether they were standard rated supplies of staff or exempt medical services. We argued successfully that, despite previous rulings, the supplies were exempt, which benefited all parties. Our client was able to deregister from VAT, but not only that, we persuaded HMRC that input tax previously claimed could be kept. This was a rather pleasant surprise outcome. We also avoided any penalties and interest so that VAT did not represent a cost to the charity in any way. If the VAT was required to be repaid to HMRC it is likely that the charity would have been wound up.
Shoot
A group of friends met to shoot game as a hobby. They made financial contributions to the syndicate in order to take part. HMRC considered that this was a business activity and threatened to go back over 40 years and assess for output tax on the syndicate’s takings which amounted to many hundreds of thousands of pounds and would have meant the shoot could not continue. We appealed the decision to retrospectively register the syndicate.
After a four-year battle HMRC settled on the steps of the Tribunal. We were able to demonstrate that the syndicate was run on a cost sharing basis and is not “an activity likely to be carried out by a private undertaking on a market, organised within a professional framework and generally performed in the interest of generating a profit.” – A happy client.
Chemist
We assisted a chemist client who, for unfortunate reasons, had not been able to submit proper VAT returns for a number of years. We were able to reconstruct the VAT records which showed a repayment of circa £500,000 of VAT was due. We successfully negotiated with HMRC and assisted with the inspection which was generated by the claim.
The message? Never accept a HMRC decision, and seek good advice!
HMRC publish VAT receipts for the UK
HMRC has published the latest summary of HMRC tax receipts, National Insurance contributions (NICs), and expenditure for the UK. It includes historical receipts on a monthly and annual basis for all taxes administered by HMRC.
VAT highlights:
- annual receipts over the last 20 years have grown from £77.4 billion in 2006 to 2007, to £180.7 billion in 2025 to 2026
- receipts as a proportion of GDP over the last 20 years have grown from 5.2% in 2006 to 2007, to 5.9% in 2025 to 2026
- annual receipts in 2020 to 2021 fell to £101.7 billion (from £129.9 billion the year before), and this fall can be attributed to the VAT payment deferment policy and the temporary reduced 5% rate for hospitality, holiday accommodation and attractions, alongside wider economic impacts of COVID-19
- receipts in 2024 to 2025 are £171.0 billion and the relatively small growth from £168.4 billion in the previous year could be attributed a lower share of consumption on goods at the standard rate of VAT than was the case in 2023 to 2024
- receipts in 2025 to 2026 are £180.7 billion (5.9% as a proportion of GDP) which could be attributed to the nominal tax base for VAT increasing due to inflation and policy measures.
VAT: Bad Debt Relief – A guide
VAT Basics
Bad Debt Relief (BDR)
We understand that businesses and consumers are likely to fall into default in increasing numbers if the economy continues to worsen and it is anticipated that the ability to settle of debts on time will significantly decrease. It is apparent that many debts will never be settled. Consequently, it appears timely to look at the available VAT relief.
The VAT position
VAT registered businesses usually account for tax on an accruals basis (but see CAS) and will therefore be required to account for output tax in the same VAT period as an invoice is issued to a customer. If that invoice is not paid and a bad debt arises this would mean that tax has been accounted for on a payment which has not been received.
Relief
Anything which can relieve the burden of VAT is to be welcomed, especially in such trying times. So VAT Bad Debt Relief (BDR) is a useful tool if a business is aware of it and understand when it may be claimed.
It is at the very least frustrating when a client does not pay, and in some cases this situation can lead to the end of a business. At least the VAT charged to the client should not become a cost to a supplier. The BDR mechanism goes some way to protect a business from payment defaulters.
There is a relief however, as normal with tax, there are specific conditions:
Conditions for claiming BDR
The supplier must have supplied goods or services for a consideration in money and must have accounted for and paid VAT on the supply. All or part of the consideration must have been written off as a bad debt by making the appropriate entry in the business’ records (this does not have to be a “formal” procedure and need not be notified to the customer). At least six months (but not more than four years and six months) must have elapsed since the later of the date of supply or the due date for payment.
Records required
Various records and evidence must be kept (for four years from the date of claim), in particular to identify:
- the time and nature of the supply, the purchaser, and the consideration
- the amount of VAT chargeable on the supply
- the accounting period when this VAT was accounted for and paid to HMRC
- any payment received for the supply
- entries in the refund for bad debts account
- the accounting period in which the claim is made
Procedure for claiming BDR
This part is straightforward: The claim is made by including the amount of the refund in Box 4 of the VAT Return for the period in which the debt becomes over six months old. The amount of BDR is either set-off against output tax due, or may create a refund position with HMRC.
Repayment of refund
Repayment of VAT refunded is required where payment is subsequently received or where the above conditions have not been complied with.
Adjustment of input tax for the debtor
Businesses are required to monitor the time they take to pay their suppliers and repay input tax claimed if they have not paid the supplier within six months. Subsequent payment of all or part of the debt will allow a corresponding reclaim of input tax. This is an easy assessment for HMRC to make at inspections, so businesses should make reviewing this matter this a regular exercise.
Finally, there is tax point planning available to defer a tax point until payment is received for providers of continuous supplies of services. Please see here
More on general VAT payment problems here.
VAT: Public EV charging update
Further to the Charge My Street Limited case, which we considered here HMRC has published Policy Paper Revenue and Customs Brief 4 (2026): VAT liability of supplies of electricity from public electric vehicle charge points.
This paper sets out the VAT treatment of supplies of electricity from public EV charging points.
HMRC’s position remains that charging electric vehicles at public charge points is standard rated for VAT.
Supplies of fuel and power to a domestic premises are subject to the reduced rate of VAT at 5%. HMRC’s long-standing policy is that electric vehicle charge points located in public areas do not qualify as domestic premises and the standard rate of VAT applies to the supply of electricity at these locations.
The First-tier Tribunal found in favour of Charge My Street Limited. It concluded that Note 5(g) of Item 1 of Group 1 of Schedule 7A to the VAT Act 1994 covers supplies of electricity to an identified person at any identifiable premises, provided the total supplied does not exceed 1,000 kWh in a calendar month. The FTT clarified there is no additional requirement for the premises to be owned or controlled by the person receiving the supply, nor do the premises need to be buildings. This means locations such as public car parks may be included. The FTT decided that supplies of EV charging at public charging stations fell within the de minimis limit for supplies of electricity, and so were deemed to be for domestic use and, accordingly, subject to the reduced rate.
HMRC has applied for permission to appeal the First-tier Tribunal’s decision.