Someone would not charge VAT if their taxable turnover is below the mandatory registration threshold (£90,000 in the UK as of 2024/25), if they sell goods/services that are specifically exempt or out of scope, or if they are a small business not registered for VAT. Other reasons include selling zero-rated items, such as books or children’s clothing.
Some goods and services are outside the VAT tax system ('out of scope') so you cannot charge or reclaim the VAT on them. For example: goods or services you buy and use outside of the UK. statutory fees, like the London congestion charge.
Certain goods and services are exempt from VAT. This means that they are not subject to VAT and therefore, do not incur the standard 20% VAT charge. Exempt goods and services include insurance, education, and health services.
1. Persons whose gross annual sales and/or receipts do not exceed P 3,000,000 and who are not VAT-registered persons. 2. Domestic carriers and keepers of garages, except owners of bancas and owners of animal-drawn two wheeled vehicle.
It is an offence under section 72(1) of the Value Added Tax Act 1994 (VATA 1994) if any person is knowingly concerned in the taking of steps with a view to the fraudulent evasion of Value Added Tax (VAT) by themselves or any other person. The offence is Triable either way.
HMRC VAT investigations are triggered by data anomalies, compliance failures, and high-risk business profiles, often flagged by their risk-assessment software looking for inconsistent figures, large repayment claims, late filings, sector-specific risks (like construction or hospitality), or third-party mismatches, with tip-offs or lifestyle discrepancies also raising flags.
Carefully creating false financial documents in an effort to mislead HMRC. Diverting funds to offshore accounts and/or in fraudulent schemes/trusts to avoid paying tax. Engaging in VAT carousel fraud or falsely claiming VAT refunds.
VAT exemption is a scheme that's designed to help people who are disabled or have long-term illnesses by omitting tax on products and services that are related to your condition. Simply put, it means you won't pay 20% VAT on essential healthcare-related things that support or help with illness or disability.
Healthcare: Medical services, hospital care, and the supply of certain medical products may also be exempt from VAT. Financial services: Many financial services, like insurance and banking, are VAT-exempt. Charitable activities: Donations and activities carried out by registered charities may be exempt from VAT.
You must register your business for Value Added Tax (VAT) if the total value of taxable goods or services is more than R1 million in a 12-month period, or is expected to exceed this amount. A business may also register voluntarily if the income earned in the past 12-month period exceeded R50 000.
When an individual or business is not registered for VAT, they cannot legally add VAT to the sale price of their van. This situation typically arises with private sellers or small businesses whose turnover falls below the VAT registration threshold.
Do small businesses pay VAT? Well, some do, and some don't. Whether or not your business pays VAT isn't so much to do with the size of your business as it is to do with your annual turnover. This is referred to as the VAT threshold.
If you are not VAT registered you still have to pay the VAT on your purchases but are unable to reclaim it. Those who suffer in paying the actual tax, are the non-VAT registered businesses and individuals, at the bottom of the chain.
Yes, it's possible to have a limited company that's not VAT registered, as long as your taxable turnover doesn't exceed £90,000 in any 12-month period.
A person or a business, that has not registered for VAT (value-added tax) can still be paid, but there's an extra step to take – adding the VAT rate yourself. This is 20% as a standard and is necessary for all goods and services purchased from a non-VAT registered company in the UK.
In the UK, the current VAT threshold is £90,000. This increased from £85,000 in April 2024. If your taxable turnover exceeds this threshold in any 12-month period, you must register for VAT. Your taxable turnover is the total value of everything your business sells that's not exempt from VAT.
Agricultural products, tuition fees, lending operations, real estate, books, transportation and other necessities are typically VAT-exempt transactions.
To get the product VAT free your disability has to qualify. For VAT purposes, you're disabled or have a long-term illness if: you have a physical or mental impairment that affects your ability to carry out everyday activities, for example blindness. you have a condition that's treated as chronic sickness, like diabetes.
You do not include sales of exempt goods or services in your taxable turnover for VAT purposes. And if you buy exempt items, there is no VAT to reclaim. Exempt items are different from zero-rated supplies. In both cases VAT is not added to the selling price, but zero-rated goods or services are taxable for VAT — at 0%.
The chances of being investigated by HMRC are generally low for compliant taxpayers, with only about 7% of investigations being random; most stem from anomalies like inconsistent income/expenses, high-risk industries (cash, self-employed), late filings, or large claims, identified through data analysis, though large businesses face higher scrutiny, and recent trends show increased enforcement. While random checks happen, keeping accurate records and explaining discrepancies significantly reduces risk, but some individuals are simply unlucky.
Things to look out for include: receiving more money in your bank account than what is shown on your payslip. receiving untaxed payments like loans or capital advances.
The HMRC 4-year rule generally means you have four years from the end of the relevant tax year to claim a refund for overpaid tax or for HMRC to issue a discovery assessment for underpaid tax due to a genuine mistake. This limit extends to six years for "careless" errors and 20 years for "deliberate" actions, with longer periods applicable for offshore matters (12 years) or specific non-domicile regimes. The rule applies across most taxes, but timeframes vary depending on the reason for the error.
