VAT advisory services

Property is the single largest source of VAT disputes we see. Getting the position right before exchange is far cheaper than correcting it afterwards.

• Commercial property VAT on purchases, sales, and leases.
• Option to tax, including notification requirements and disapplication rules.
• Land transactions and TOGC treatment.
• Capital goods scheme adjustments across the ten year period for qualifying property.
• Construction services, including the domestic reverse charge and the correct rate for new build, conversion, and refurbishment work.

• Identifying exempt supplies and separating them from taxable trading activity.
• Academy trust VAT recovery, including the section 33B refund scheme.
• Partial exemption methods and de minimis calculations.
• VAT treatment of lettings, catering, trips, and commercial hire.

Healthcare income is not automatically VAT exempt. The treatment depends on the nature and purpose of the supply, who provides it, and in some cases how the service is delivered.

• Mixed supplies, where a single charge covers exempt and taxable elements, and the work of separating exempt and taxable income correctly.
• The VAT treatment of medical reports, expert witness work, occupational health services, consultancy, room hire, and management services, all of which fall outside the medical care exemption more often than practices expect.
• Partial exemption and restrictions on input VAT recovery where expenditure supports both exempt and taxable activity, for example dispensing GP practices or pharmacies recovering VAT on costs that serve both NHS and private work.

Cosmetic treatments: a growing source of VAT risk

Cosmetic procedures do not qualify for the medical care exemption in the way many providers assume. Exemption depends on genuine diagnosis and treatment of a health condition, not on who performs the procedure or how it is marketed. HMRC has been increasingly willing to challenge this in recent tribunal cases.

In one recent case, a private clinic offering Botox, dermal fillers, and thread lifting, administered by a GMC-registered doctor, argued the treatments qualified as medical care because of who provided them. The tribunal disagreed: with little evidence of diagnosis at the initial consultation stage, the clinic was found to have failed to register for VAT correctly, and was charged £1.6 million covering VAT dating back over a decade. Weight loss injections and vitamin drips sit in similarly uncertain territory. A separate tribunal case found some vitamin drip treatments could qualify for exemption, but the outcome turned on the medical record-keeping behind each case rather than the treatment itself.

Getting this wrong is expensive: HMRC can enforce retrospective VAT registration going back up to 20 years, with VAT, penalties, and interest all following.

Read our full analysis of VAT classification for cosmetic treatments

This is also a trend worth watching in dental practices specifically, where a shift toward cosmetic work such as whitening and straightening, and away from traditional NHS-related treatment, is changing the VAT profile of a growing number of practices.

• Business and non-business apportionment.
• Zero rating and reliefs on advertising, construction, and qualifying goods.
• VAT treatment of grants, donations, and sponsorship income.

• Cross-border VAT and place of supply rules for goods and services.
• One Stop Shop (OSS) and Import One Stop Shop (IOSS) registrations for sales into the EU.
• Import VAT, postponed VAT accounting, and duty deferment.
• EU trade, including local registration obligations and fiscal representation.
• Marketplace and platform VAT obligations for online sellers.

A VAT health check is a review of how VAT is applied across your business, covering liability, recovery, processes, and historic treatment. Businesses use them to find reclaim opportunities and to identify errors before HMRC does. They are most valuable after a period of growth, a change in activity, or a change in finance personnel.

It depends on whether the seller has opted to tax, whether the sale qualifies as a transfer of a going concern, and how you intend to use the property. If you will make taxable supplies from the property, VAT is usually recoverable, but you may need to opt to tax yourself. The capital goods scheme may then require adjustments over ten years. Get advice before exchange, because the position is difficult to change afterwards.

If your business makes both taxable and exempt supplies, you cannot recover all of your input VAT. The standard method apportions residual VAT based on the ratio of taxable to total supplies. Where the standard method gives an unfair result, you can apply to HMRC for a special method. An annual adjustment is required, and de minimis limits may allow full recovery of small amounts of exempt input VAT.

HMRC will usually open with an information request or a compliance visit covering records, returns, and systems. It may review specific transactions or test a sample. If HMRC finds errors, it can raise an assessment covering up to four years, or 20 years where it considers the behaviour deliberate. Penalties depend on whether HMRC judges the error careless, deliberate, or concealed, and on whether the disclosure was prompted or unprompted. Take specialist advice before responding.

VAT registered businesses must keep digital VAT records, file returns using MTD compatible software, and maintain digital links between systems so data is not manually transferred. Bridging software is permitted where it connects digitally to your records.

Often, yes, but the mechanism varies. Import VAT can usually be recovered through your UK VAT return, and postponed VAT accounting removes the cash flow cost. VAT incurred in other countries generally cannot be reclaimed on a UK return and needs a refund claim or a local registration in that country. Place of supply rules determine where VAT is due in the first place.

Before a property transaction, before an acquisition or restructure, before entering a new market or launching a new revenue stream, and as soon as HMRC makes contact. Advice taken before a transaction is far cheaper than correcting the VAT treatment afterwards.