Tag Archives: marcus-ward-tax

VAT treatment of cryptoassets – new HMRC guidance

By Marcus Ward 19 October 2026

Following our previous articles on cryptoassets, HMRC has published a document: Help with VAT treatment of cryptoassets — GfC2.

This guidance sets out:

what HMRC means by cryptoassets
when a business needs to register
what information a business need to collect about your customers – and why
the rules about the place of supply for cryptoasset transactions
what records digital platforms and marketplaces need to keep

It is aimed at UK and overseas businesses involved in cryptoasset transactions where UK VAT may apply. It includes businesses that sell or exchange cryptoassets and businesses that operate platforms where other people do so.

Overview

Cryptoassets (sometimes called ‘tokens’ or ‘cryptocurrencies’) are a digital representation of value that are created, stored and transferred securely using public computer networks, and cannot be altered or destroyed.

There are many different types of tokens, and they can have different uses. Some tokens can represent ownership of something or the right to access particular goods or services. The asset, goods or services represented by the token are known as the underlying asset or supply. The underlying asset can be tangible or intangible, such as digital or physical art, music and collectables.

A non-fungible token (NFT) is a unique digital certificate that represents ownership of an asset. The VAT treatment of an NFT will depend on the asset it represents. For example, if the underlying asset is a piece of digital art, then the same VAT treatment as digital art will usually apply. If the underlying asset is a physical item, such as a car, then the same VATtreatment as a car will usually apply.

It is worth emphasising that there are no separate VAT rules for cryptoassets. VAT still depends on what you supply and how it is used, not the definition or description of a token

HMRC says that following these guidelines will help taxpayers reduce the risk of mistakes, VAT adjustments and penalties.

VAT: Exports – updated guidance

By Marcus Ward 13 October 2026

Zero-rated exports

HRMC has updated its internal guidance VEXP20300 on VAT exports.

This sets out the conditions for zero-rating an export.

It clarifies the requirements for zero-rating the indirect export of personal goods (The zero-rating applies as long as the goods do not travel in accompanied baggage) and emphasises the stricter evidential requirements for indirect exports.

VAT Planning – Why?

By Marcus Ward 9 October 2026

Why? How? Where? When? What? Who?

Why?

It is impossible for any business to do such a basic thing as set its prices properly unless it understands its VAT position and ensures that this is reflected in those prices, terms and contract terms etc. The aims of tax planning are:

compliance
business planning
avoiding unnecessary tax costs
maximising input tax claims
minimising VAT payable where possible
obtaining any refunds and retrospective claims due
avoiding penalties and interest

How?

The “How?” is dependent on the specific business and its needs. We offer a flexible and tailored service from start-ups to multi-national companies. We offer:

solutions to ad hoc issues
negotiation
structuring and restructuring
contractual arrangements
Dispute resolution (with HMRC, suppliers, customers etc)
full reviews and health checks
training of staff and management
assistance with international/cross-border supplies and purchases
due diligence
cost reduction exercises
income maximisation programmes
comprehensive land and property advice
advice on overseas indirect/GST matters both EC and non-EC
accounting and documentation advice

The VAT planning process – “The four As”

Ascertainment
Analysis
Alternatives
Action

More details of this approach here.

Where?

VAT, or its derivations applies in most countries around the world. So, the answer is probably “everywhere”. This is particularly relevant with cross-border transactions. A common issue is the “Place Of Supply” (POS) rules which dictate where a supply takes place and thus the VAT liability of it.

When?

Planning needs to be done in advance of transactions. Once a contract has been entered into without thought for the VAT consequences, the damage may have already been done.

Where there is a one-off transaction (eg; sale of premises, sale of know-how, issue of shares), this is, by definition, something of which the business has little experience. It is an occasion to assume that advice is needed, rather than to assume that the most obvious treatment is correct.

Since the impact of a change in the pattern of a business’ activities will continue down the years, rather than being restricted to a single occasion, it is doubly important to ensure that the correct treatment is identified from the outset.

Periodic reviews are a good time to look, not only at the future, but also at the past, to see whether developments in case law reveal past overpayments which may be reclaimed. This is particularly important since repayments are subject to the four-year capping provisions.

The essential step is to have some means of becoming aware of changes and monitoring these with VAT in mind. The means to be adopted are various and will depend on the size and type of the business.

What?

“Right tax, right time”. This means compliance with the relevant legislation but not paying any more VAT than is necessary. As one wag once said; “You must pay taxes. But there’s no law that says you have to leave a tip.”

Since VAT is a transaction-based tax, timing is often crucial and the objective is to legitimately defer payment to HMRC until the latest time possible, thus improving cash flow and retaining the use of VAT monies for as long as possible. The converse of this of course, is to obtain any repayments of VAT due from HMRC as soon as possible. We must also consider avoiding VAT representing an actual cost and taking advantage of any beneficial UK and EC legislation, determinations, guidance, case law and Business Briefs etc available.

VAT Planning objectives

improve cash flow
improve competitive position
legitimately reducing VAT payments or increasing repayments
minimise administration/management
avoid unnecessary tax or compliance costs
avoid penalties and interest

Who?

Marcus Ward Consultancy of course!

HMRC new ‘VAT Assist’ service

By Marcus Ward 5 October 2026

VAT Assist

HMRC has announced a VAT Assist service which is due to be launched in April 2027.

The service will compare data added to a taxpayer’s VAT return against information HMRC holds for that business to provide incisive feedback to help businesses submit accurate tax returns.

The service will be available to businesses using participating third-party software and HMRC will monitor and review the relevance and effectiveness of the feedback provided.

The pre-submission VAT Return data is transmitted from third-party software to HMRC via an API. That data is analysed in real time, using a rule-based model, comparing to data held within HMRC. Where potential errors are identified, digital ‘nudges’ will be transmitted through the API for the third-party software to present to the taxpayer.

The message will be displayed to the taxpayer through their software before the return is submitted although the taxpayer is not required to act on the feedback and may proceed with their submission if they consider that the return is correct.

A VAT Did you know?

By Marcus Ward 29 September 2026

Pelargonium seeds are zero-rated, but azalea seeds are standard rated.

VAT: Collagen beauty drinks. The Minerva Research Labs Limited case

By Marcus Ward 21 September 2026

Latest from the courts

In the Minerva Research Labs Limited v HMRC [2026] UKFTT 1320 (TC) First-Tier Tribunal (FTT) case the issue was whether collagen beauty drinks are standard-rated, or zero-rated as food of a kind used for human consumption. In order to determine the correct VAT treatment, the Tribunal was required to apply a judicial ‘multifactorial test’. This meant assessing the product’s ingredients, appearance, marketing, and function to decide how an ordinary person would view the product.

Background

The appellant produces a range of collagen-based liquid supplements which are targeted at the health of skin, hair, and joints and muscles. The products are packaged in cartons containing small, single-use, mono-dose bottles.

Minerva initially accounted for output tax on the sale of the product. However, it subsequently submitted an error-correction claim which sought a refund of circa £3.64 million on the basis that the drinks should be zero-rated food. HMRC rejected the claim, prompting Minerva’s appeal.

NB: For VAT purposes, ‘food’ includes drink.

Decision

The FTT acknowledged that the products provide nutritional value; supplying a notable percentage of daily protein requirements alongside energy, vitamins, and minerals, but that nutritional density does not automatically equal food. It determined that:

the products were held out for sale as liquid beauty products
they were purchased for cosmetic and anti-ageing reasons
they were not marketed to be eaten instead of a meal, or as a snack
the words ‘dose’ and ‘treatment’ appeared marketing and packaging
the products were labelled with precautions or warnings (that food would not)

Consequently, the products were not food and standard rating applied.

The appeal was therefore dismissed.

Legislation

VAT Act 1994, Schedule 8, Group 1, item 1. Food of a kind used for human consumption.

Commentary

Another case on what is food. New products seem appear on a daily basis and the products themselves and marketing of the develop at a rapid pace as a result of changes to consumer tastes and health trends. Trying to fit modern foods into 1970s definitions (when VAT was introduced) will always cause absurd, contradictory results.

This case follows on from well-know cases such as: Jaffa Cakes, Mega Marshmallows, Walkers Sensations Poppadoms, Duelfuel Nutrition, and Greggs, sausage rolls as well as flapjacks, brownies and cereal bars. If there is any doubt about whether a ‘food’ product is covered by the zero-rating, we advise that expert advice is sought (we are happy to provide it!)

VAT: New guidance for fund management services

By Marcus Ward 15 September 2026

HMRC has published new guidance GfC20 on the sometimes complex subject of outsourced fund management services.

These Guidelines for Compliance (GfC) set out HMRC’s recommended approach and are designed to help businesses determine the correct VAT treatment of outsourced fund management services, including whether services should be treated as single or multiple supplies.

More on exemption for fund management services here

VAT: Electronic sales suppression (ESS) compliance checks

By Marcus Ward 8 September 2026

HMRC has published a new Factsheet CC/FS68A which provides information on electronic sales suppression (ESS). It explains the powers HMRC can use to help it identify and tackle ESS. It also explains the penalties which may be levied if a person is in possession of an ESS tool.

More details on ESS and ESS tools here.

HMRC powers

Finance Act 2022, Schedule 14 allows HMRC to issue an information notice for ESS. This means HMRC can ask for certain information that applies to ESS. It allows the issue of a Notice to a ‘relevant person’ for a ‘relevant purpose’.

Relevant Person

A ‘relevant person’ is any person who HMRC think may be liable to a penalty for being involved in ESS.

Relevant purpose

A ‘relevant purpose’ is the reason HMRC is asking for information about ESS and ESS tools.

The law allows HMRC to do this in three situations. These are to help HMRC:

decide whether a relevant person has made, supplied, promoted, or possesses an ESS tool and whether this person is liable to a penalty
understand how the ESS tool works
identify any other person who has made, supplied, promoted, or possesses the ESS tool.

VAT: What is a taxable supply? – Definition

By Marcus Ward 8 September 2026

VAT Basics

Taxable supply

It is sometimes useful when considering a transaction to “go back to basics” for VAT purposes. There are certain tests to determine whether a supply is taxable, and these are set out below. Broadly, the tests establish whether UK VAT is payable on a sale and they determine whether an entity is “in business”, that is; carrying on an economic activity.

A transaction is within the scope of UK VAT if all four of the following conditions are satisfied:

It is a supply of goods or services.

There is a distinction between the two types of supply as different VAT treatments may apply. Generally, everything that is not tangible goods is services. However, if no goods or services are actually provided, there is no supply. Indeed, if there is no consideration for a supply, in most cases it is not a taxable supply.

It takes place in the UK.

There are quite complex tests to consider when analysing the “place of supply”, especially where services are concerned. If the place of supply is outside the UK then usually no UK VAT is due, however, the supply may be subject to VAT in another country.

It is made by a taxable person.

A taxable person is any legal entity which is, or should be, registered for VAT in the UK.

It is made in the course or furtherance of any business carried on by that person

Business

The term “business” is only used in UK legislation, The Principal VAT Directive refers to “economic activity” rather than “business” and since UK domestic legislation must (well historically) conform to the Directive both terms must be seen as having the same meaning. Since the very first days of VAT there have been disagreements over what constitutes a “business”. I have only recently ended a dispute over this definition for a (as it turns out) very happy client. The tests were set out as long ago as 1981 and may be summarised as follows:

Is the activity a serious undertaking earnestly pursued?
Is the activity an occupation or function, which is actively pursued with reasonable or recognisable continuity?
Does the activity have a certain measure of substance in terms of the quarterly or annual value of taxable supplies made (bearing in mind that exempt supplies can also be business)?
Is the activity conducted in a regular manner and on sound and recognised business principles?
Is the activity predominantly concerned with the making of taxable supplies for a consideration?
Are the taxable supplies that are being made of a kind which, subject to differences of detail, are commonly made by those who seek to profit from them?

So, if these tests are passed a taxable supply exists. The next step is to establish which VAT rate applies. In an often quoted comment from the judge in the Morrison’s Academy Boarding Houses Association 1978 STC1 Court Of Session case “…In my opinion it will never be possible or desirable to define exhaustively ‘business’ ”. Which what it lacks in helpfulness, makes up for in candour.

There was something of a deviation from the Lord Fisher tests in the Longbridge Court of Appeal case, however, that appears to be a blip and HMRC seem to have reverted to Lord Fisher in subsequent hearings on the same topic. A bit of a: watch this space area of VAT.

Recent cases on business

Recent case law on this issue here and here and HMRC Internal guidance on the Lord Fisher tests here

Commentary

Tip: It is often easier to consider what isn’t a taxable supply to establish the correct VAT treatment. Specific examples of situations which are not taxable supplies are; donations, certain free supplies of services, certain grants or funding, some compensation and some transactions which are specifically excluded from the tax by legislation, eg; transfers of going concerns (TOGC).

I think that it is often the case that the basic building blocks of the tax are overlooked, especially in complex situations and I find it helps to “go back to the first page” sometimes.

VAT: EV charging points in new dwellings are zero-rated

By Marcus Ward 1 September 2026

HMRC has updated Notice 708 (para 13.8.1) on 26 August 2026 to include electric vehicle charging points in the list of accepted building materials ordinarily incorporated into a building or its site. These installations qualify for zero or reduced VAT rating when supplied alongside eligible construction or conversion services of the construction or conversion of new dwellings.

It should be noted that this zero/reduced rating only applies to EV charging points as part of residential construction and that standalone equipment sales and public EV charging services have different VAT rules.