VAT & indirect tax services

An indirect tax is a tax collected by a business or intermediary and passed on to HRMC, rather than being paid directly by the person or organisation that ultimately bears the cost. VAT is one of the most common forms of indirect tax, alongside duties and other transaction-based taxes.

Value Added Tax (VAT) is a tax charged on goods and services supplied by VAT-registered businesses. Businesses that collect VAT from customers may be able to reclaim it on eligible business costs, with the net amount paid to or reclaimed from HMRC.

The standard rate of VAT in the UK is 20%. Some goods and services are charged at a reduced rate of 5%, some are zero-rated at 0%, and others may be exempt from or outside the scope of VAT.

VAT registered businesses are required to charge VAT on taxable supplies and remit this tax to HMRC. Typically, the final customer ultimately bears the cost of VAT. A business must register for VAT if its taxable turnover exceeds the UK VAT registration threshold (or if it anticipates that it will exceed this threshold within the specified timeframe.

The UK VAT registration threshold is £90,000 in taxable turnover over any rolling 12-month period. A business must also register if they expect their turnover to exceed £90,000 in the next 30 days alone.

Risks include incorrect VAT treatment, missed registration requirements, incomplete records, errors in VAT returns, issues with land and property transactions, and difficulties managing international VAT obligations. These risks can lead to penalties, interest, disputes with HMRC and unexpected costs.

VAT can have a direct impact on cash flow if payments, recovery claims or reporting processes are not managed effectively. Delayed reclaims, unexpected VAT liabilities or errors in VAT accounting can tie up working capital and create unnecessary financial pressure.

A business should seek advice before significant transactions, international expansion, property deals, acquisitions, disposals, systems changes or where there is uncertainty over VAT treatment. Early advice can help reduce risk, improve cash flow and avoid costly issues later.

A VAT health check can identify potential errors, compliance gaps and areas where processes could be improved. It can also highlight opportunities to recover VAT, strengthen controls and reduce the risk of challenge from HMRC.

Yes. Effective VAT and indirect tax management can support growth by giving businesses greater confidence over pricing, contracts, cash flow, international trade and transaction planning. It helps ensure tax considerations are built into commercial decisions from the start.