Category Archives: HMRC Publications

Updated Guidance on Zero-Rated VAT for UK Exported Goods and Customs Processes

By   17 February 2026
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HMRC has updated its guidance on applying zero-rated VAT to goods exported from the UK – VAT Notice 703.

The amendments reflect the latest legal requirements (the latest force of law) and customs processes as of 13 February 2026 and removes outdated customs terminology and guidance.

Summary

Goods exported from the UK can be zero‑rated provided they physically leave the UK and all HMRC conditions are met. Notice 703 sets out who can apply zero‑rating and the legal basis under the VAT Act 1994.

Conditions & time limits: Exporters must ensure goods are exported within specified time limits (generally within three months, but longer in some cases) and meet detailed conditions depending on whether the export is direct, indirect, or in special scenarios (eg; retailers, ships, aircraft).

Evidence & record‑keeping: Zero‑rating is only valid if acceptable proof of export is obtained and retained (such as customs declarations and commercial transport documents), with clear rules on records, customs systems, and compliance checks.

In order to zero-rate a supply, it is vitally important that exporters obtain the correct evidence that goods have physically left the UK and that all descriptions of the goods are accurate and satisfy HMRC requirements. There has been a significant amount of case law on export documentation (an example here) which illustrates that this is often an area of dispute.

VAT: Private schools guidance updated

By   10 February 2026
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HMRC has updated its guidance on charging and reclaiming VAT on goods and services related to private school fees.

Since 1 January 2025, all education services and vocational training provided by private schools in the UK for a charge have been subject to standard rated VAT.

The guidance explains how some payments and situations relating to education are treated for VAT. It covers how to check if VAT is due on payments linked to private school fees and what VAT can be reclaimed.

Updates

The example of parents contracting and paying therapists directly and the example of a school supplying education and therapy under separate fees have been updated to add clarity. Also, information on the VAT implications for fee-paying sixth forms and further education providers has been updated.

HMRC to end postal letters

By   21 January 2026
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No more snail mail.

HMRC has announced that it will end most postal letters from Spring 2026.

It will begin phasing out hard copy letters in favour of a ‘digital by default’ communication model. This shift is designed to modernise the tax system, improve communication speed, and save approximately £50 million annually in printing and postage costs by the 2028/29 tax year. 

Taxpayers who use the HMRC app will stop receiving paper letters automatically and will receive an email notification of when correspondence is available to view online.

The transition will start in spring 2026 and expand gradually as systems are updated. Paper letters will not disappear entirely. They will continue to be sent to those who are digitally excluded, such as the elderly or disabled, as well as those who actively opt out. 

VAT: Removal of linked goods concession

By   20 January 2026
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HMRC has published Revenue and Customs Brief 1 (2026): Removal of the linked goods concession

This brief confirms that the Extra Statutory Concession (ESC) described in paragraph 3.7 of Notice 48 is no longer required. HMRC considers that the supplies previously eligible to be treated as single supplies under the concession should be treated as single supplies under the legislation, as confirmed by existing case law.

Examples of such cases: here, here here here and here. 

Businesses should now refer to HMRC’s policy as described in VATSC11113 – Supply: Single and multiple supplies: HMRC’s approach: The general approach.

Note

A VAT ESC is a formal relaxation by HMRC permitting a tax treatment not strictly permitted by law, to resolve minor anomalies, prevent hardship, or simplify administration. These provide businesses relief they would not otherwise get, but it has no legal force and isn’t for tax avoidance.

VAT: Partial exemption – HMRC guidance updated

By   13 January 2026
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HMRC Publications

HMRC has updated its Notice 706 on partial exemption. This guidance explains partial exemption and the methods and calculations a business may use to calculate the amount of input tax it can recover. 

More detailed guidance has been added to Paragraph 10.2 on a company’s sale of existing shares.

VAT treatment of the supply of locum doctors

By   16 December 2025
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HMRC has issued Revenue and Customs brief 9 (2025)  which covers the VAT liability of the supply of temporary medical staff (locum doctors).

This change to HMRC’s previous view (that these supplies were taxable) is a consequence of the First-Tier Tribunal’s decision in Isle of Wight NHS Trust case which ruled in favour of the Trust, finding that the supply of locums is an exempt service. 

The Brief also provides guidance for businesses who wish to claim a refund of overdeclared output tax following the decision.

VAT Grouping: Protection of the Revenue

By   9 December 2025
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The salient amendments are to the references to ‘protection of the revenue’ and ‘Revenue loss’.
VAT grouping is a facilitation measure by which two or more entities can be treated as a single taxable person (a single VAT registration) for VAT purposes. The measure was once restricted to “Bodies Corporate” which includes; companies of all types and limited liability partnerships. However, from 1 November 2019, grouping is additionally available for all entities, including; partnerships, sole traders and Trusts in certain cases.
HMRC has the vires to refuse an application for a VAT group, or remove a member if HMRC consider that it may lead to a VAT loss.

The Change

“The definition of ‘protection of the revenue’

Where this is considered necessary for the protection of the revenue, the VAT grouping legislation gives HMRC the power to:

  • prevent a person joining a VAT group
  • remove an existing member from a VAT group

We usually will not use our protection of the revenue powers if the revenue loss follows from the normal operation of grouping. If we feel that the revenue loss does not follow the normal operation of grouping, then we would consider using our protection of the revenue powers, such as:

  • where we identify enhanced risks to the collection of revenue
  • the use of VAT avoidance and distortion in the liability of the group’s supplies

In this context, ‘revenue loss’ means the VAT that is not charged when one company in a group sells to another company in the same group. This usually happens when one or more companies in the VAT group cannot reclaim all the VAT they pay because they make supplies that are exempt from VAT.

We will use our revenue protection powers if it looks like the main reason for VAT grouping someone is to ignore supplies from that company’s overseas branches to other members of the VAT group.

This applies whether that person is established in the UK or has a UK fixed establishment”.

VAT: New guidance on using postponed VAT accounting

By   2 December 2025
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HMRC has published (on 28 November 2025) a collection of new guidance on postponed VAT accounting (PVA).

The guidance covers what a business needs to do if it is using PVA to account for import VAT on its VAT returns.

The publication brings together all PVA guidance, giving detailed information about:

 

VAT and the 2025 Budget

By   27 November 2025
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Budget 26 November 2025
There was not too much excitement in the budget for indirect taxes (there was no change to the registration threshold, nor any VAT rates), but there were some minor changes.
VAT Grouping
The rules relating to cross border VAT grouping will be clarified. From the Budget date of 26 November 2025′ the UK will revert to its previous position on grouping to restore the “whole establishment” principle. HMRC also published Revenue and Customs Brief 7 (2025): Revised VAT grouping rules and the Skandia judgment, confirming that HMRC now considers that an overseas establishment of a business VAT grouped in the UK should be treated as part of that VAT group, even when located in an EU member state that does not operate whole entity VAT grouping.
This means that services provided between a UK head office and its overseas branch will once again be disregarded for VAT purposes, even if the branch belongs to a VAT group in another jurisdiction. 
HMRC acknowledges that some VAT groups may have accounted for VAT in line with the previous guidance and may now be eligible to reclaim overpaid VAT through the error correction notification procedure.
This HMRC brief provides more details.  

Private hire vehicles

Suppliers of private hire vehicle and taxi services will be excluded from the scope of the Tour Operators’ Margin Scheme (TOMS) from 2 January 2026, except where these are supplied in conjunction with certain other travel services. The government also published a response to the Consultation on the VAT Treatment of Private Hire Vehicles and HMRC published Revenue and Customs Brief 8 (2025): VAT Tour Operators’ Margin Scheme — supplies by private hire vehicle or taxi operators, which explains how to account for VAT as a private hire vehicle operator, a taxi operator, or business re-selling such supplies.

E-invoicing 

The government will require all VAT invoices to be issued in a specified electronic format from April 2029. An implementation roadmap will be published at Budget 2026 further to consultation with businesses. 

VAT treatment of business donations of goods to charity

There will be a new VAT relief to be be introduced on 1 April 2026 for business donations of goods to charity for distribution to those in need or use in the delivery of their charitable services, ie; in addition to goods donated for sale. HMRC also published a response to the Consultation on the VAT treatment of business donations of goods to charity, and a policy paper, VAT relief for business donations on goods to charities. The relief will apply to goods valued up to £100 per item, with a higher £200 threshold for essential electrical items to help tackle digital poverty. Eligibility is strictly limited to registered charities, meaning community interest companies (CICs) and social enterprises are excluded unless they register as charities. This corrects an anomaly where there is no VAT liability when businesses dispose of goods to landfill, but may incur one when donating those same goods to charity. 

Motability

From 1 July 2026, vehicles leased through the Motability Scheme will be subject to 20% VAT on top-up payments for more expensive vehicles which are made in addition to the transfer of eligible welfare payments for more expensive vehicles on the scheme. The standard rate of Insurance Premium Tax will apply to scheme insurance contracts: VAT and Insurance Premium Tax: change to reliefs for qualifying motor vehicle leasing schemes – GOV.UK There will be no changes to vehicles designed for, or substantially and permanently adapted for, wheelchair or stretcher users. 

ATCS

The Government has confirmed that the ‘Advance Tax Certainty Service’ (ATCS) will launch in July 2026 and provide clearances on corporation tax, stamp taxes, VAT, PAYE and the construction industry scheme, where there is no existing statutory route to certainty.