Tag Archives: HMRC-publication

VAT: Private schools guidance updated

By Marcus Ward 10 February 2026

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.

VAT Grouping: Protection of the Revenue

By Marcus Ward 9 December 2025

HMRC has updated VAT Notice 700/2 – Group and divisional registration.

The salient amendments are to the references to ‘protection of the revenue’ and ‘Revenue loss’.

VAT Groups

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”.

Form VAT 2 – registering a partnership updated

By Marcus Ward 7 October 2025

HMRC has updated is Form VAT2. The Form now requires each partner’s date of birth when an application to VAT register a partnership is made.

Guidance on registering partnerships here.

Registration of various legal entities – guidance here.

VAT: HMRC launches new online interactive tool for compliance checks

By Marcus Ward 19 August 2025

HMRC has introduced a new interactive tool which aims to help taxpayers with compliance checks.

The new free online Interactive Compliance Guidance tool can help businesses understand HMRC compliance checks. It aims to provide information and support about compliance checks (VAT inspections).

The tool provides information to help taxpayers understand:

HMRC compliance checks
why HMRC has requested specific information or documents
how to request extra support due to health or personal circumstances
how to appoint someone to act on your behalf
what to do if you disagree with a decision made by HMRC
how to pay a tax assessment or penalty.

It brings together existing compliance guidance and videos in one place, making it easier to find and navigate the appropriate information.

More on VAT inspections – How do HMRC choose which businesses to visit and what is “Connect”? here.

VAT: HMRC Annual report and accounts to 31 March 2025

By Marcus Ward 21 July 2025

HMRC has published its annual report and accounts 2024 to 2025 on 17 July 2025.

Highlights

Total tax receipts were £875.9 billion – a 3.9% increase from 2023/24
VAT revenue was £178.5 billion – an increase of £13.0 billion on 2023/24 figures
5,500 new compliance officers for HMRC
A focus on technology transformation including the use of AI
Aim to bring in an additional £7.5 billion per year by 2029/30 by an increased use of technology
Focus on improving ‘customer’ service (taxpayers!)
310 prosecutions brought as a result of our criminal investigations, securing 281 convictions
76.2% proportion of customer service interactions made through automated or digital self-serve channels
2.8 million number of new HMRC app users
30m+ VAT returns processed by Making Tax Digital for VAT
26-40 hours saved per year, on average, for each business using fully functional MTD for VAT software
78 million declarations made on HMRC Customs Declaration Service
£5.1 million financial penalties issued for non-compliance with money laundering regulations
HMRC three ongoing priorities:
- closing the tax gap
- improving day-to-day performance and the customer experience
- driving reform and modernisation of the UK’s tax and customs system .

VAT: Payments on account – updated guidance

By Marcus Ward 9 June 2025

HMRC updated its payments on account (POA) guidance in May 2025, The update includes information to support when a business should send a VAT return.

What are POA?

These are advance payments towards a business’s VAT bill. They are mandatory.

HMRC will notify a taxpayer to make POA if a business renders VAT returns quarterly, and it owes more than £2.3 million in any period of 12 months or less.

Under the POA arrangement, businesses make interim payments at the end of months two and three for each return quarter. The interim payment is intended to cover part of the overall VAT liability for the that quarter. The balancing payment for the return’s VAT liability will be settled when the business submits its VAT return payment. Quarterly VAT returns are filed online as normal.

POA calculation

HMRC will calculate POA based on a business’s annual VAT liability in the period that it goes over the threshold. The annual VAT liability in that period will be divided by 24 to arrive at an instalment amount.

A taxable person who has been in business for less than 12 months will have POA calculated by HMRC on a pro rata basis.

POA start date and annual cycle

The payments on account cycle starts in the first quarter after a business exceeds the £2.3 million threshold.

The payments will remain the same until the start of the next annual cycle.

The annual cycle begins in April, May or June depending on which VAT return ‘stagger’ a business is on. HMRC bases the amount of payments during the annual cycle on the liability in the period known as the ‘reference year’.

POA due dates

The due dates for POA are the last working day of the second and third months of every VAT quarter no matter what the period end date is. The seven-day extension for paying electronically does not apply to POA.

POA that are not paid on time will be subject to late payment interest.

Due dates for quarterly balancing payments

Balancing payments are due with the VAT return and must clear HMRC’s bank account by the last working day of the month if standard period end dates are used.

Late payments

If a business does not make POA or the balancing payment in full and on time HMRC will:

take immediate action to recover the debt
charge late payment interest
consider charging late payment penalties on amounts unpaid after the balancing payment due date
consider transferring a business from quarterly to monthly returns

Removal from a POA arrangement

If a business’s VAT liability falls below £2.3 million in the reference year HMRC will remove it from the arrangement six months later.

Alternative to payments on account

If making POA and submitting quarterly VAT returns does not suit a business, it can choose to make VAT returns and payments monthly.

Commentary

As may be seen, it is important to recognise the POA limit and to make payments on time. There is an obvious cash flow impact and plans should be put in place if the VAT turnover is nearing the threshold.

VAT: HMRC to close online forums

By Marcus Ward 2 May 2025

HMRC has announced that it will be closing its online forums and shifting to digital support with effect 30 June‌‌‌ 2025.

This decision has been taken as a result of increasing popularity of HMRC’s newer digital support (set out below) and to move towards a more modernised approach.

As an alternative to the previous forums, the following HMRC digital support channels can be used:

Webchat – an agent only channel which offers a faster alternative to telephony
@HMRCcustomers on X (formerly Twitter) – for general queries
Agent Talking Points webinars – for information on a range of subjects with opportunities for participants to submit questions
tax agents’ handbook – for information to help tax agents and advisers find guidance, use HMRC services and contact HMRC
service dashboard – for information on current service levels for post and online requests
Agent Updates – a monthly online digest of information specifically for the agent community

VAT: New Annual Accounting Scheme guidance published

By Marcus Ward 25 November 2024

HMRC have issued new guidance on the Annual Accounting Scheme.

A business can use form VAT600AA if it is already registered for VAT and wants to join the Annual Accounting Scheme.

VAT: HMRC introduce Chatbot

By Marcus Ward 25 November 2024

HMRC has introduced a generative AI chatbot to support users in accessing information on business rules and support, including tax.

The digital assistant is being trialled and HMRC request feedback on its effectiveness.

A disclaimer informs users of the chatbot’s limitations and advises them to verify answers using included GOV.UK links before proceeding. Users must confirm understanding of these limitations.

It is unlikely, in its current form, that the chatbot will be able to address complex issues, particularly as it excludes HMRC manuals.

HMRC internal manual: VAT Assessments and Error Correction update

By Marcus Ward 21 October 2024

HMRC’s manual VAT Assessments and Error Correction was updated on 15 October 2024.

This internal guidance is for HMRC inspectors (but is equally useful for advisers) covers assessments and error correction. The amendments apply mainly to General assessment procedures: Importance of avoiding delay.

The manual covers:

It also refers to for the most up-to-date guidance on reasonable excuse CH160000.as a defence against penalties and interest.