Search Results

Australian GST Guide - How GST Works in Australia including GST registration, Invoicing, VAT recovery, imports and exports etc. Introduction GST is a Consumption Tax levied at 10% on most goods and services consumed or sold in Australia. Please see the below buttons for specific details. GST - How it Works GST Registration Charging GST Invoicing Accounting for GST VAT Recovery VAT Exempt Exports Sale of Business VAT Groups Branches & VAT Property & Land Australian GST

Read this guide and discover how VAT is applied and recovered when goods are imported into the UK and also the the VAT liability of good exported from the UK. Importing & Exporting Goods and VAT Importing Goods Goods imported into the UK will normally attract VAT at the same rate as goods purchased in the UK (20% or 5% reduced rate). The VAT payable to HMRC will normally have to be paid on entry to the UK or declared and paid on the VAT return of the business importing the goods if they are using the Postponed VAT Accounting Procedure. If you import goods into the UK you will need to make a customs declaration which can either be done by: The Business or individual Importing the goods A Transport / Freight Forwarder, Customs Agent or Broker or Parcel Operator who will bring the goods to the UK and / or make the necessary customs declarations on your behalf. Businesses bringing goods in to the UK will require and EORI number (Economic Operators Registration and Identification Number) which will need to be used when completing Customs Declarations. If you are using a freight forwarder, customs agent etc, you will need to provide them with your EORI number and details of the goods you require to be imported. Note: if you are bringing goods into the UK for personal use only, you will not require an EORI There are different ways UK VAT registered businesses can pay for VAT on goods imported into the UK. These are listed below. Paying immidiately on importation Use the Postponed Accounting Procedure Deferring the payment using a Duty Deferment Account Paying VAT Immediately If you pay VAT on Goods imported immediately you will be able to recover the VAT on your VAT return using a VAT import Statement as evidence. You can also use immediate payment methods such as: Approving a payment through your online bank account Online or telephone banking Card CHAPS (Clearing House Automated Payment System) Bacs (Bankers Automated Clearing System) Postponed VAT Accounting Procedure Using the postponed accounting procedure, allows VAT registered businesses to include the import VAT payment as part of their VAT return and has the added benefit of being able to reclaim the VAT on the same return. In effect resulting in zero payment to HMRC. Postponed VAT Accounting Requirements: Goods imported are for use in the business (or can be a mixture of business / non business where the split is unknown at the time of import) Your VAT registration number must be included on your Customs Declaration Inform your Frieght Forwarder or Customs Agent that you wish to use postponed VAT accounting so that they can complete the customs declaration appropriately You do not have to directly inform HMRC you are using postponed VAT accounting Note: You must be the legal owner of the goods to recover the VAT Duty Deferment Procedure Alternatively, for businesses that have larger and regular imports, they maybe able to defer paying import VAT by setting up a Duty Deferment Account with HMRC. This will allow HMRC to collect the VAT automatically from their account. A duty deferment account lets the importer (or someone who represents them) make one payment a month through Direct Debit instead of paying for individual consignments. You do not need to apply for a deferment account to defer import VAT if you are using postponed VAT accounting for imports. To complete your application you’ll need your business’s: EORI number Name associated with your EORI number Registered company number (if this applies), in the UK this will be from Companies House UK address associated with your EORI number Correspondence address VAT number (if this applies) Company directors’ and officials’ details, including date of birth Person responsible for customs authorisations, their details and practical customs experience Your estimated debt Note there are strict rules surrounding the operation of duty deferment accounts and if not adhered to can lead to goods not being cleared by HMRC. You will need a C79 importation certificate to reclaim the VAT on your VAT return. See below link detailing the procedure. Check how to get your import VAT certificate (C79) Recent FFT case - Piramal Healthcare UK Limited vs HMRC Piramal Healthcare UK Limited (“Piramal”) is a pharmaceutical company based in the UK. As part of its business, it imports pharmaceutical goods into the UK and, historically, has paid the import VAT on the value of those goods. The supplier does not make any charge for the supply of the goods and remains the owner of the goods. Having provided certain services in relation to the goods, they are either sent back to the customer, sent to third parties for further processing or sent to clinics for use in clinical trials. Until 2018, Piramal claimed the import VAT which it paid as an input tax credit on its VAT returns. HMRC issued Piramal with a formal decision that it was not entitled to claim credit for the import VAT as the goods: Were not used for the purposes of Piramal’s business in the sense that the cost of the goods did not form part of any onward supply made by Piramal. HMRC made an assessment to recover VAT which they considered Piramal had over-claimed and also withheld a repayment for import VAT. Key Points: Piramal did not itself make any onward supply of the goods. The only supply it made was the supply to the owner of the goods of the services which it provided. Piramal did not own the goods and the ownership remained with the customer The UK.s FTT ruled that import VAT can only be recovered if the imported goods are used as a cost component of an onward supply. (Basically the VAT paid must be attributable to an onward supply). This was not the case with Piramal. So to ensure the import VAT incurred can be recovered: The goods imported must be for use in your business (cost component to make onward taxable supplies) Have the right to dispose of them (usually as owner) and importer of record See Full Case decision here: TC 08966.pdf (tribunals.gov.uk) Another recent case is (TSI Instruments Limited v The Commissioners for HMRC) See below https://caselaw.nationalarchives.gov.uk/ukftt/tc/2025/1278 Exporting Goods VAT is a tax on goods used in the UK and you do not charge VAT if goods are exported from: Great Britain to a destination outside the UK Northern Ireland to a destination outside the UK and EU . You can zero rate the sale, as long as you get and keep evidence of the export, and comply with all other conditions. You must also make sure the goods are exported, and you must get the evidence within 3 months from the time of sale. This can be longer for goods that need processing before export and for thoroughbred racehorses. The time of sale is the earlier of the day you: send the goods to your customer get full payment for them You must not zero rate sales if your customer asks you to deliver them to a UK address. For more information please see HMRC publication: VAT on goods exported from the UK (VAT Notice 703)

This guide will provde a general understanding of how VAT and other levies are applied to goods and services in Ghana including VAT rates and exemptions. Ghana VAT The body responsible for VAT collection and administration is the Ghana Revenue Authority: GRA The standard VAT rate is 15% and applies to most goods and services in Ghana and also the importation of goods into Ghana. There are other levies (when applicable) charged on the value of taxable goods and services as follows: National Health Insurance Levy (NHIL): 2.5% Ghana Education Trust Fund Levy (GETFL): 2.5% COVID-19 Health Recovery Levy: 1% Therefore the 15% is applicable to the value of the supply of goods or services including the above levies and VAT returns are due monthly. Other Rates of VAT Estate Developers - A flat rate of 5% VAT on the supply of immovable property Retailers - A flat rate of 4% (3% VAT and 1% Covid-19 levy) applies to retailers with an annual turnover between GHS200,000 and GHS500,000. VAT Registration Threshold The VAT registration in Ghana is mandatory if business turnover exceeds GHS 200,000 in any 12 month period or less. Non-resident businesses supplying digital services to customers in Ghana must register for VAT immediately upon their first sale. VAT Exempt Supplies Examples live Animals Educational Services Medical Supplies and Pharmaceuticals Transportation - transportation via bus, train, boat, air. Crude Oil products - Petrol, LPG, kerosene, Diesel etc Land Buildings - Dwellings

Introduction There are a number of VAT Accounting Schemes that businesses can use to account for VAT to HMRC rather than using the normal method of reporting and filing. These are designed to either assist business cash-flow or smooth out VAT payments over the year with each providing benefits in their own right. There are specific eligibility and operational rules underpinning each scheme and businesses should also assess whether a particular scheme is beneficial to use in their business. Summaries of the main schemes are listed below with links at the end to the specific HMRC notices which provide in depth detail about each scheme. Cash Accounting Scheme The scheme allows you to account for VAT on the basis of payments received and made, rather than tax invoices issued and received. It’s particularly beneficial if you give your customers lengthy periods of credit or if you have a high level of bad debts. You can use this scheme if the annual value of your taxable supplies (excluding VAT) is not more than £1,350,000. For more information see Cash accounting (VAT Notice 731) . Annual Accounting Scheme The scheme is open to businesses who expect to have taxable supplies of up to £1,350,000. It allows you to submit one VAT Return a year instead of the usual 4. You’ll need to make interim payments by electronic means based on your actual or estimated annual VAT liability. For more information see Annual accounting (VAT Notice 732) . Flat Rate Sch eme The scheme is designed to simplify your records of sales and purchases. It allows you to apply a fixed flat-rate percentage to your gross turnover to arrive at the VAT due. It’s available to businesses with a VAT-exclusive annual taxable turnover of up to £150,000 but you need to apply and be approved by HMRC before you use it. It will not benefit every business so, before you apply, you should see VAT Notice 733: Flat Rate Scheme for small businesses for more information. -Contains public sector information licensed under the Open Government Licence v3.0. VAT Accounting Schemes

Read our comprehensive guide on Tax Risk and Control Frameworks for VAT, including the interation with SAO signoff, BRR, Internal and Externaland Internal Audits, Organisational Culture and HMRC guidance. Risk & Control Framework-VAT Risks & Controls for Governance VAT Risk & Control Framework - Key Components VAT Risk Register SAO Checklists for Function Heads Documentation of all VAT Processes Risk & Control Employee Objectives Annual Entity Risk Review / Rating Internal & External Audits Board Level / Management Review, Sign-off & Communication Periodic Review & Testing of Controls Uncertain Tax Treatments Flow Diagrams & Decision Trees Business Risk Reviews Service Level Agreements GFC's HMRC Complinance Guidelines Company Risk & Control Culture A VAT risk and control framework is a documented and structured system to identify, manage, and mitigate VAT risks to ensure accurate and compliant VAT and GST reporting to a local tax authority (HMRC in the UK). It involves establishing a VAT risk register, defining key controls, who is responsible and accountable for them, confirming controls are documented, applying a risk weighting for each risk and conducting regular reviews and testing of each control to ensure they are effective and thus preventing tax authority penalties. It is important for a risk and control framework to be a "living document" in that it is constantly reviewed and updated to ensure that an organisation continues to mitigate risks associated with Indirect Tax. VAT can be a significant cost to a business, especially those that are partially exempt (unable to recover all of their input VAT from HMRC that they incur on their costs. For example, Large multinational banks and insurance companies. Senior Accounting Officer Sign off Where an organisation has a Risk and Control Framework for VAT & GST, it will assist and enable the Senior Accounting Officer to sign off their annual declaration to HMRC confirming that the organisation: Has adequately documented its controls and processes for the following areas - Customer on-Boarding, Accounts Payable and Receivable, Inter-Company Recharging, Capital Good Scheme, Partial Exemption Methods agreed with HMRC, Internal VAT Allocation Methodologies for VAT recovery, Outsourced Services, Finance and Tax Service Centre supplied services, VAT and other Indirect Tax System change processes, Automated Processes. Front End System to SAP System Interfaced Transactions, Payments Outside of the Accounts Payable Processes, International VAT Transaction Compliance, Imports and VAT compliance, Entertainment and Company Events Compliance, Employee Expenses and VAT etc. Has carried out testing of these controls Has complied with all the necessary VAT legislation in relation to returns filed with the tax authority Has adequately trained staff with the appropriate qualifications and experience to prepare returns, advise and monitor VAT & GST risks Has filed accurate VAT and GST returns on time and paid the correct amount of tax Has appropriate VAT accounting and reconciliations procedures Has documented and reviewed all new products and services to ensure the correct VAT treatment from a systems and billing perspective Has reviewed any changes in business structure to ensure there has been correct inter-company billing Is MTD compliant Is E invoicing compliant post 2029 Uncertain Tax Treatments An organisations VAT Risk & Control Framework should include a control that ensures that any uncertain tax treatments which have a tax advantage of more than £5 million for each relevant period are identified where and organisations: Turnover is over £200 million in a financial year Balance sheet total is over £2 billion in a financial year HMRC Risk & Controls Guidance for VAT (GFC8) HMRC (UK Tax Authority)have issued guidance on the risks and controls and requirements (GFC 8) that they would expect organisations to adopt to demonstrate that their VAT processes are documented and robust to ensure accurate reporting and compliance. Its important for organisations to review this document and embed any control gaps within their processes as this will enable HMRC to have greater confidence in their risk and controls culture and processes if they conduct an audit. Business Risk Review HMRC or other global tax authorities may conduct Business Risk Reviews as part of their risk and compliance monitoring of organisations. This will involve HMRC evaluating overall Tax and VAT governance, billing and VAT reporting systems, documentation of processes, risk and control frame works to determine if risks are being effectively managed. The aim will be to provide a business with a risk rating high, medium or low and as such will determine how often they scrutinise the business in future. As such, if an organisation has robust Risk and Control Framework for VAT & GST and it is embedded within the company's culture then this will help businesses in securing a low VAT BRR rating. Internal & External Audits Having a VAT Risk and Control Framework will be a good premise for the internal and external auditors to review at the start of their audit. It will provide a greater understanding of the business, inherent risk and how they are being managed or mitigated. Without a VAT risk and control framework, auditors will have to conduct a more extensive audit to gather information that would normally be included within a risk and control framework document or pack. Board Level Approval and Embedding a Visible Risk Culture Having a VAT Risk and Control Framework Document is a good start but one has to always ask, how will the controls be implemented, tested and embedded within the culture of the organisation. Unless a company has a strong risk and control culture embedded from Board level down, having a VAT / Tax Risk and Controls Framework document may not be enough mitigate against Finance, Tax and VAT risks. As such, It is important that the TAX / VAT Risk & Controls Framework becomes part of an organisations culture by building it into employee objectives, recruitment policies, company policy and backed up by inter functional Service Level Agreements (SLA's) which can be reviewed against performance annually.

Salary Sacrifice Schemes - Types of benefits and the HMRC rules around how VAT is applicable and should be accounted for. Introduction Salary Sacrifice Schemes allow employees to receive benefits provided by employers by exchanging a reduction in salary for those benefits. From a VAT perspective the forgoing of salary is consideration for a taxable benefit and as such output VAT is due and any associated input VAT is recoverable by the business under the normal rules. VAT will be payable to HMRC by the employer on the cost of providing these benefits. Types of Salary Sacrafice Benefits - Taxable (20% Output VAT Due) Cycle to Work Scheme Under the Cycle to Work Scheme employers purchase bicycles and safety equipment and provide them to employees. Where this is under a salary sacrifice arrangement employers must account for output tax based on the value of the salary foregone by the employee in exchange for the hire or loan of a bicycle. VAT is due when a bicycle is disposed of and its value should normally be based on the price of an identical or similar item, taking into account the age and condition etc. Valuing bicycles has caused difficulties for Scheme operators and therefore, to reduce administration burdens, the table used to value bicycles for direct tax purposes may be used http://www.hmrc.gov.uk/manuals/eimanual/EIM21667a.htm (link is external) . Any bicycles that fall outside of the table (such as antique or specialist bicycles) should be valued using the normal VAT valuation rules. If businesses choose to use lower values, they may be challenged in which case evidence will be required to support the valuation. Gym Membership Corporate gym memberships where the benefit is optional and not provided free to all employees. Output VAT is due on cost of the membership. Face Value Vouchers Where vouchers, such as those available from high street retailers, are provided under a salary sacrifice arrangement (as defined above) input tax may be claimed and output tax is due on the consideration paid by the employee. Car Parking Car parking provided to employees near their place of work where an amount is deducted from their salary is taxable (standard rated) and output VAT is due on the cost of the parking. Any input VAT incurred by the Employer can be recovered under the normal VAT recovery rules. Computers, Technology, Mobiles Computers and laptops, phones or other peripherals provided to employees via salary sacrifice for personal use are also taxable and output VAT is due on their supply. Food and Catering Provided to Employees Food and catering provided to employees under a salary sacrifice scheme will be taxable under the normal catering rules. VAT payable on taxable supplies of catering. No output VAT payable on items that are zero rated. Types of Salary Sacrifice Benefits - Non Taxable (No Output VAT Due) In addition to salary sacrifice benefits that are taxable at the standard rat e (employer pays), there are salary sacrifice benefits where forgoing salary is not considered as consideration for receiving benefits and as such Output VAT is not payable by the employer when provided to employees. Some of these are listed below. Child Care Vouchers - Salary forgone to a third party for childcare support Free Food and catering (available to all staff) Workplace gym available to all employees where employees are not charged for using it. Health Insurance Dental Insurance Others S alary Sacrifice VAT - Guide on how VAT is Applied and Accounted for.

How and when VAT is applied to charges for delivering goods. Introduction Where a business sells goods and delivers these goods to a customer in the UK, the VAT liability will depend on how the contract is worded and whether delivery is inclusive of the price of the total goods or separately charged. The service provided will either be a: Supply of Delivered Goods Supply of Delivery Services Goods Delivered with no Separate Charge for Delivery Where a business sells goods and delivers them to its customers, if there is no separate charge for delivery or it is free, then Standard Rated VAT of (20%) applies to the total selling price. Goods Delivered with a Separate Charge for Delivery Where a business contracts to sell goods including delivery, then a single supply of delivered goods has been made. If a separate Delivery charge for delivery is made or itemised on an invoice separately, then the liability will still follow t hat of the underlying goods. Fore example, If the goods are Standard Rated then the Delivery charge will be Standard Rated. Delivery is not Required Under the Contract or I am delivering someone else's Goods Where goods are delivered under contract and delivery is not required under that contract but it is agreed separately to deliver the goods, then this is not a single supply of delivered goods. Any separate charge for delivery will be Standard Rated 20%. This will also be the case where goods belonging to someone else are delivered and a charge for delivery is made. This charge will be Standard Rated 20% Charges for Packaging Any separate charge for packaging will also be Standard Rated (20%) Freight Transport and Haulage The VAT liability of Haulage Services (falls under Freight Transport Services for VAT) where goods and a Vehicle (normally a van or lorry) and a driver are supplied to transport goods will depend on a number of factors as follows: Whether the customer is a Business Customer or Private Customer The Place of Supply Whether the Haulage is carried out directly or services are contracted out Freight Transport and Haulage For Customers in Business The Place of supply of Haulage services for a customer in business will be where the customer belongs. Follows the General Rule for the Place of Supply for Business Customers. So if a UK haulage business is contacted by a UK customer to deliver goods in the UK then then the place of supply is the UK as that's where the customer belongs. The haulage services will be Standard Rated 20%. However where the place of supply would normally be the UK under the General Rule because the business customer is located in the UK, but the actual haulage takes place outside the UK, then the place of supply is where the haulage is performed. For Example - If a UK haulage company is contracted by a business customer who is located in France and the haulage takes place in France then the place of supply is France and the service is Outside the Scope of VAT but with associated input VAT recovery. (Hence UK Input VAT incurred by the UK Haulage firm on costs associated with this contract is recoverable from HMRC) Freight Transport and Haulage Where the Haulage Firm is a Sub-contractor Where the business supplying the haulage has been engaged by another haulage firm to provide services to their customer, the place of supply will be where the principal haulage firm is based. For Example - If a haulage firm in France contracts with a haulage firm in the UK on a subcontracted basis to provide transportation to a customer based in the UK, the subcontracted haulage firms supply will be outside the scope of UK VAT as its supply is to its customer the principle haulage firm. Freight Transport and Haulage For Non Business Customers The place of supply of Freight / Haulage where the customer is a private individual and not a business customer is as follows: Transportation occurs in the UK = UK place of supply and Standard Rated 20% VAT Non UK = Place of supply = Country where haulage / transport occurs Zero Rated Freight Transport and Haulage where goods are moved from the UK or to the UK Where a UK haulage firm provides a transport of goods service from: A place within the UK to a place outside the UK and the actual place of supply is the UK as the customer is in the UK, then this service will be Zero Rated. A place outside the UK to a place within the UK and the actual place of supply is the UK as the customer is in the UK, then this service will be Zero Rated. Freight Transport and Haulage Provided to a UK Business Customer Where a Transport of Goods Service is provided by a non UK firm to a business customer in the UK to move goods in the UK, then Reverse Charge VAT will be applicable in the UK under the normal Reverse Charge VAT rules. (See Reverse Charges for more detail) -Contains public sector information licensed under the Open Government Licence v3.0. Delivery of Goods and VAT

Bad Debt Relief is a HMRC process whereby VAT amounts invoiced to your customers and paid to HMRC can be recovered after the debt has been oustanding for 6 months. Introduction Bad debt relief allows a business to claim a refund of the output tax they have paid to HMRC when they do not receive payment from their customers. A refund can only be claimed when all the conditions have been met and must be repaid if the claimant subsequently receives payment from their customer. The relief is two-sided, in that the recipient of the supplies which have not been paid for is required to repay input tax claimed. When businesses make taxable supplies and include VAT on their invoices, they have to pay the output VAT to HMRC on their next VAT return regardless of whether they have actually received or collected the amount invoiced (including the VAT) from their customers. If it turns out that a customer cannot pay for the goods or services a business has invoiced them for, then this creates a problem as the output VAT has been paid to HMRC but the cash has not been received from the customer to fund this payment. This can create cash-flow problems especially where the amounts involved are significant. Bad Debt Relief In the event of the above situation, where debts become irrecoverable, HMRC will allow businesses to make bad debt relief claims to recover the output VAT they have paid but not recovered from the client. To be able to make a claim for Bad Debt Relief, businesses must satisfy a number of conditions. Note: Where customers have recovered the input VAT from HMRC that was invoiced by their supplier, this will have to be repaid. Conditions That Have to be Met to claim Bad Debt Relief The debt is over six months old. The debt has been written off in the refunds for bad debt account. The claimant has a separate refunds for bad debt relief account (which may be maintained outside normal accounting systems) containing the following information: The outstanding amount to which the claim relates. The period in which the tax was accounted for and paid to HMRC. The amount of bad debt relief claimed. The period in which the claim was made. The amount of VAT chargeable on each supply Any payment received for the supply The date and number of each invoice issued; if no invoice has been issued the supplier must detail the date, the name of the purchaser and the nature of the supply The debt is over six months old. The debt has been written off in the refunds for bad debt account. The claimant has already accounted for and paid the tax being reclaimed, via a VAT return or assessment. The value of the supply concerned cannot exceed the open market value. Time Limits for Making a Claim A claim for bad debt relief must be made within four years and six months of the later of the following: The date when the amount became due and payable; and The date of the supply. Other Key points Regarding Bad Debt Relief Claims Where Bad Debt Relief claims have been made and the customer subsequently settles the debt and VAT, then any VAT reclaimed using Bad Debt Relief will need to be repaid to HMRC. A debt cannot be written off in the refunds for bad debt account until six months from the date when the debt became due and payable. Who Can Make a Bad Debt Relief Claim The Individual or company who made the supply in the first place The new owners of a business that was transferred as a going concern where the new business owners have taken over the same business VAT registration number and there were existing bad debts of historic sales. Bad Debt Relief Exclusions No entitlement to Bad Debt Relief if value of supply is greater than the open market value Debt has been factored to a third party Bad debt relief is not available to businesses that use the cash accounting scheme or one of the retail schemes that allow the daily takings total to be adjusted for opening and closing debtors. Where import agents have paid import VAT on their customer’s behalf and are then not paid by their customers, there is no entitlement for the agent to claim bad debt relief in respect of the unpaid import VAT. (If the agent is not paid for the services he provides there may be an entitlement to bad debt relief subject to all conditions being met). Relief from VAT on bad debts (VAT Notice 700/18) -Contains public sector information licensed under the Open Government Licence v3.0. VAT - Bad Debt Relief - Guide on HMRC Bad Debt Relief Process to Recover VAT

Israel VAT Guide - VAT rates, VAT on goods and services, digital services, e invoicing, reverse charges, input VAT deduction and more. Israel - VAT VAT in Israel is administered by the Israel Tax Authority which was established in 2004. Sales The standard VAT rate in Israel is 18% and is applicable and applied to most goods and services at bought and sold in Israel including the importation of goods from outside Israel and on services purchased from outside Israel where reverse charge VAT is applicable and payable by the customer. There is no VAT registration threshold in Israel and you are obliged to register as a dealer if you sell goods or provide services although you can be classified as an exempt dealer if annual turnover is lower than 120,000 NIS and you open an exempt dealer file online, via a local representative or physically visiting the local tax office with the appropriate documents. The export of Goods and Services is Zero Rate for VAT purposes. Non resident online vendors selling digital services to residents in Israel need to register for VAT locally by using a representative. The basic tax point for goods is when the goods are delivered regardless of when consideration or cash is received for the goods. To alleviate cash flow for small businesses with a turnover that does not exceed 2M NIS, they will be required to pay VAT on receipt of the proceeds of sale. (However if an invoice is issued, then the VAT on the invoice must be included in the figures reported for VAT. Purchases and VAT Recovery Input VAT (VAT incurred on purchases) and paid on imports is deductible from VAT owed on sales provided the input VAT is incurred for business purposes and is directly attributable to taxable sales. (standard and zero rated) Input VAT incurred in relation to supplies of exempt goods or services is not deductible. Input VAT incurred prior to VAT registration is deductible provided it is and can be proved that it was incurred and used for the establishment of the business. For more information on how VAT is applied and the Tax Authority rules, please see the link below to the Israel Tax Authority website. Link below for more information guide to the new VAT dealer Source ITA

Financial Services and VAT- Explore the different Products and Services and their respective VAT Treatment. Financial Services - VAT Introduction Most Financial Services are Exempt from VAT under the VAT Exemption but there are some services that are not covered by the Finance Exemption and as such are charged at the Standard Rate of VAT when supplied in the UK. VAT Law UK VAT law is contained in the Value Added Tax Act 1994, which is referred to in this notice as the VAT Act. Services that, although connected to financial services, are not themselves exempt: bookkeeping services - Standard rated VAT applies when supplied in the UK debt collection and credit control - Standard rated VAT applies when supplied in the UK depository and trustee services - Standard rated VAT applies when supplied in the UK equipment leasing - Standard rated VAT applies when supplied in the UK executor and trustee services and the administration of estates - Standard rated VAT applies when supplied in the UK investment, finance and taxation advice - Standard rated VAT applies when supplied in the UK management consultancy - Standard rated VAT applies when supplied in the UK merger and take-over advice - Standard rated VAT applies when supplied in the UK portfolio management - Standard rated VAT applies when supplied in the UK registrar services - Standard rated VAT applies when supplied in the UK safe custody and safe transportation services - Standard rated VAT applies when supplied in the UK service companies’ activities, for example administration, payment of salaries and wages - Standard rated VAT applies when supplied in the UK the issue by a bank of a note payable to bearer on demand (but taxable at the zero-rate valuation of assets - Standard rated VAT applies when supplied in the UK assessing the direct tax liabilities of a holding - Standard rated VAT applies when supplied in the UK investment analysis - Standard rated VAT applies when supplied in the UK market sector research share consultancy - Standard rated VAT applies when supplied in the UK general financial or investment advice - Standard rated VAT applies when supplied in the UK accountancy services - Standard rated VAT applies when supplied in the UK tax and legal advice - Standard rated VAT applies when supplied in the UK supplying a draft prospectus - Standard rated VAT applies when supplied in the UK Where these services merely form one element of the service being provided, it will be necessary to look at the whole service being provided in order to determine the correct supply position and the liability of that supply or those supplies. Single or multiple supply Certain financial services, such as the provision of intermediary and sub-contracted ‘outsourced’ services, can constitute a number of component services that, if supplied separately, may have different VAT liabilities. In order to establish the correct liability of such packaged services you may need to apply certain tests to ascertain the overall liability of your supply. You can find further information in the HMRC VAT Supply and Consideration manual (VATSC80000) Outsourced services If you provide sub-contracted (or ‘outsourced’) services to a supplier of exempt financial services, such as a bank, the liability of your supply depends on the nature of the service you perform. It does not become exempt simply because your customer uses your service in making its own exempt supplies. You must determine the exact nature of your supply. For it to be exempt, it must, when viewed broadly, form a distinct whole, fulfilling the essential functions of a supply described within the finance exemption set out in the VAT Act, Schedule 9, Group 5 Input tax You are entitled to deduct the input tax incurred that you use or intend to use in making taxable supplies. You cannot normally deduct input tax where this relates to exempt supplies (although special rules apply to supplies of financial services made to persons located outside the UK and EU. If your input tax relates to both taxable and exempt supplies, you can normally deduct only the amount of input tax that relates to your taxable supplies. You can find further information in HMRC Notice 706 Partial exemption . If you purchase capital items for business use you may need to make adjustments of input tax in subsequent years. Capital items are assets that are capable of being used in your business over a period of years. The items concerned for which adjustments may be necessary include computer equipment, land, buildings and refurbishments. You can find further information on this in HMRC Notice 706/2 Capital Goods Scheme . Financial services made to, or received from, persons belonging outside the UK If you make financial services to or receive them from people who belong outside the UK you should read HMRC Notice 741 and 741A Place of Supply of Services . It explains when you can treat services that are supplied to a person belonging outside the UK as outside the scope of VAT. It also explains how you should account for VAT on the receipt of certain financial services from outside the UK (reverse charge). You should note that not all the finance related services mentioned in HMRC Notice 741 Place of Supply of Services are exempt from VAT when supplied within the UK. Sorting and counting money When supplied on their own the following are taxable: carriage of cash re-stocking of cash machines and sorting or counting of money This is because the services being applied to the money are the same as those that could be applied to any type of goods that can be counted, packed, delivered, collected and reconciled. Services that include an element of making payments or transfers between bank accounts are exempt. Where a supply has a mixture of taxable and exempt elements, its overall character will determine the liability. Certain supplies of bank notes The first issue, by the bank of issue, of Bank of England, Scottish and Northern Irish banknotes is zero-rated. This provision overrides the exemption allowed for dealings with legal tender banknotes. Payment services for household bills If you accept over-the-counter payments for household bills and charge for the service, your supply is exempt. Dealing with numismatic and investment coins If you sell bank notes or coins, whether or not they are legal tender, as: collectors’ pieces investment articles items of numismatic interest your supply is normally taxable on the full selling price, whether or not they are sold for more than their face value. Examples include: bank notes proof coins Maundy money precious or base metal coins However, if you make supplies of collectors’ items of numismatic interest, you may be able to use the special scheme explained in Notice 718 Margin Scheme for second-hand goods, works of art, antiques and collectors’ items. Sales in some gold coins are exempt as investment gold. Further information is provided in HMRC Notices 701/21 Gold and 701/21A Investment gold coins . Foreign exchange transactions Foreign exchange transactions are normally exempt supplies. If you act as principal, then the consideration is the net result of your transactions over a given period of time plus any fees or commission charged. However circumstances may arise where you enter into a foreign exchange contract that does not provide for a consideration in any form. In this instance there may not be a supply for VAT purposes. For further information please see HMRC VAT Finance Manual (2740) . Clearing and settlement services A service supplied by a clearing-house for settling indebtedness between members is an Exempt supply. Automated Teller Machines (ATMs) The provision of an ATM and software Supplies of an ATM itself or the software required to run it are both taxable (Standard Rated), whether or not the consideration is based on the ATM’s use. ATM replenishment Services provided in connection with the routine operation of an ATM, including filling with cash, maintenance and repair, are taxable (Standard Rated) supplies. Convenience, interchange and reciprocity fees ATM providers sometimes make charges that are described as convenience fees, interchange fees or reciprocity fees. Where the charge is for: the facility to obtain money the provision of money transaction processing the operation of accounts the supply is exempt. Site rental The granting of a right to permanently attach an ATM to the ground, or for its incorporation into the fabric of a building, is an exempt supply unless the grantor has elected to waive exemption. Further guidance can be found at section 2 of HMRC Notice 742 Land and property . Current, deposit and savings accounts Many of the charges made by banks, building societies or similar organisations in connection with the operation of a current, deposit or savings account will be exempt. Exceptions include charges made for: the issue of certain types of financial certificate (for example, audit and balance certificates supplied to third parties) the extra cost of special printing or overprinting of cheque books and paying-in books Please note that the above list is not exhaustive. Charges made for dishonoured cheques or direct debit payments As either a bank or a supplier of goods or services, you may charge your customers, because: they have failed to honour their cheques or direct debit payments and, if you are the supplier, you have borne the cost of bank charges If you are a bank making such a charge to your customer, the charge will be a part of your overall service for running the customer’s account and will be exempt from VAT. If you are a supplier making such a charge to your customer, the charge will be outside the scope of VAT. Banking Services Provision of information on the state of the client’s accounts by the bank providing the electronic banking services, bank statements, the transfer of funds and the debiting and crediting of accounts. These services are Exempt. Provision of information on share prices, foreign exchange rates, balances on accounts with other financial institutions. These services are Standard Rated. Hire of equipment which can be used for other purposes (for example where the link gives access to Bloomburg). These services are Standard Rated. Sale of equipment. These services are Standard Rated. Deductions from pay If, as an employer, you charge for deductions from the pay of your employees for items such as: insurance premiums mortgage repayments union subscriptions your supply is exempt. Securities for money A security for money can be described as a document under seal or under hand for consideration containing a covenant, promise or undertaking to pay a sum of money. Securities for money are not restricted to a specific type of document: examples include bills of exchange, financial guarantees and promissory notes. The issue of a security for money is exempt. Travellers’ cheques The issue or encashment of travellers’ cheques is exempt. Loans, granting of credit and advances If in the course of your business for a consideration you: supply credit advance money in the form of loans provide overdrafts or other advances your supply is exempt. The charge you make for a loan, advance or credit facility is usually described as interest. The value of the exempt supply in the grant of credit or loan is the gross interest or other sum received, but not the repayment of capital loaned. Interest received on money deposited is consideration for an exempt supply. Instalment credit finance This type of credit is usually advanced in connection with the supply of goods, and may be under a hire purchase, conditional sale or credit sale agreement. The provision of instalment credit in these situations is exempt where a separate charge is made for the facility of instalment credit and disclosed to your customer. If this condition is satisfied, the supply of credit is exempt and the supply of goods taxable, the value being the cash price stated in the agreement before any deposit or any part exchange value is deducted. If you do not satisfy this condition, the full amount paid by the customer is consideration for the supply of goods. The full amount of VAT on the goods is accounted for at the time of supply. Usually this is when the goods are delivered, but it may be preceded by any part payment, or the issue of an invoice. Conditional sale, hire purchase and credit sale Conditional sale - means the sale of goods where the price is payable by instalments. The goods remain the property of the seller until the full price is paid or the customer meets another agreed condition. Hire purchase - occurs under an agreement for the hire of goods for periodic payments, where the hirer has the option to purchase. Credit sale - means the sale of goods which immediately become the property of the customer, but the price is payable in instalments. What supplies are not considered exempt credit The provision of the following to your customers are not supplies of exempt credit: Late payment penalties If you do not explicitly allow your customers to defer payment (see paragraph 4.5 ) and impose a penalty because they have not paid by the due date, the penalty is not consideration for a supply and is outside the scope of VAT. Discount for prompt payment If you offer a discount on condition that your customer pays for your supply of goods or services within a specific time, then the VAT value will be based on the actual amount paid by your customer. See HMRC VAT Notice 700: the VAT Guide for further details and invoicing requirements Personal Contract Purchase (PCP) Some Personal Contract Purchase (PCP) or similar contracts may be described as HP. If they contain a contractually optional payment exercisable at the end of the contract, which at the outset of the contract is set at or above the anticipated open market value of the asset at the time the option will be exercised. They are treated as a supply of leasing services. There is therefore no supply of credit and the full value of each instalment is taxable - even if part of the fee is shown as credit in the agreement. Deferred payments You may allow customers to defer payment but make an extra charge for allowing them to do so. If the charge relates to periods before and up to the time of the supply (see HMRC VAT Notice 700: the VAT Guide ) it is not a charge for credit, but is further consideration for the supply of the goods or services. Alternatively where you agree to defer payment beyond the time of supply and make an additional charge for doing so, such a charge will be consideration for an exempt supply of credit. interest charged on the outstanding balance on a card account Credit Cards Interest charged on the outstanding balance on a card account is Exempt Annual membership, joining and subscription charges or charges made by card companies to the cardholder for the issue of the card is Exempt The charge made to merchants (retailers) by credit card companies. This charge usually takes the form of discounts from the amounts the card companies reimburse the merchant is Exempt Joining fees charged to merchants by card companies is Exempt Imprinter/terminal rental charges are Standard Rated The consideration for a sale of goods for example imprinters/terminals in connection with any card scheme is Standard Rated Credit Management Services If you provide credit management, and you do not grant the credit, your supply is taxable. If, on the other hand, you grant the credit and also manage that credit, your supply will be exempt. A supply by a third party of taxable credit management could typically include the following features: credit checking, this includes debt profiling, assessing credit worthiness, electoral roll checks and obtaining references valuation of assets such as property, land, vehicles authorisation services (including those that go beyond just checking the applicant’s signature or agreeing credit or payment within limits set by the person providing the credit) taking decisions on credit applications on behalf of the credit provider creating and maintaining records on behalf of the credit provider in order to enable them to fulfil their legal obligations, such as those relating to credit applications, payments and credit transactions monitoring a payment record or dealing with overdue payments (although read section 5 on debts and related services) The above list is not exhaustive. Provision of outsourced services to a loan provider If as a business you provide a package of outsourced service to a loan provider that consists of services prior to and after the granting of a loan, your supply to the loan provider is exempt if you provide all of the following services as a central part of that supply: the operation of bank accounts on behalf of the credit provider arranging the transfer of funds to the borrower, and the processing of loan repayments (and any additional charges or fees) by direct debit or cheque Debt collection The supplies made by a debt collection agency, or by someone involved in debt collection, are taxable. Debt collection covers the collection of debts of any nature, even if payment of those debts has been received before, on, or after their due date. Although debt collection service undertaken on behalf of a creditor company may involve some negotiation of the repayment of a debt by the debtor to the creditor this will not be an exempt debt negotiation service. For example if you: issue letters to the debtor on behalf of the creditor demanding payment seek to chase the debt in some other form (for example trying to contact the debtor by phone.) seek to locate a debtor on behalf of the creditor provide accounting services to the creditor (that is you monitor the debtor’s payment account and notify the creditor of any defaulted payments) These services will be taxable (Standard Rate). Any debt negotiation services will be ancillary to the principal service of debt collection. The above list is not exhaustive. Insolvency Practitioner Services The supplies made by an Insolvency Practitioner are normally taxable (Standard Rated) Where an Insolvency Practitioner acts as both nominee and supervisor in any type of formal Voluntary Arrangement then the supplies by the Insolvency Practitioner are exempt Further details on Insolvency Practitioner services can be found in the VAT Finance manual (VATFIN3260). Shares, securities and other financial instruments The issue of securities such as shares, bonds, loan notes, debentures, are not supplies for VAT purposes when the purpose of that issue is to raise capital. This includes the issue of units or shares in an investment fund. Input tax incurred that relates to an issue of shares or other securities will be recoverable to the extent that the issuer’s business activities generate taxable supplies. VAT Finance Manual (4250) provides further details on this. For further guidance on input tax recovery please read VAT Notice 706: partial exemption . Transactions in securities that are already in existence are exempt when they are sold or transferred in the course of a business activity and the normal partial exemption rules apply. Stock lending Stock lending describes a situation where one person, the ‘lender’, transfers to a second person, the ‘borrower’, the legal title, along with all the dividends and rights, to securities. The borrower agrees to return to the lender, at a later date, an equivalent number of the same securities as those received. Stock lending is an exempt supply, the consideration being the fee charged to the borrower. Where stocks are loaned, the borrower who holds legal title receives dividends, which are not consideration for a supply Share underwriting A share underwriter guarantees to buy a proportion of any unsold shares when a new issue is offered to the general public, and usually receives either commission or charges a fee. A share underwriter may also underwrite an issue by agreeing to guarantee that buyers will be found. In either case the supply is exempt. There is not a supply for VAT purposes by the issuer who sells the securities to the underwriter (see paragraph 6.1 ), but there is a subsequent exempt supply by the underwriter when those securities are sold. Nominee services You are a nominee if you hold securities in your own name on behalf of a third party (the beneficial owner). Your services of acting as nominee are exempt. This includes charges for transferring stock from one nominee to another which is seen as an exempt transaction in securities. Custody Services There are 2 types of custody services, safe custody and global custody. Safe custody Safe custody services are taxable (Standard Rated). These services include the provision of the purely physical service of safekeeping, sometimes referred to as safe deposit facilities. A supply of safe custody services is taxable if you, as a business in the UK, contract to supply the service to your client irrespective of whether the securities are held in the UK, an overseas branch of your business or elsewhere. If you lease or hire a specific site to your client rather than provide a service of secure storage within your premises, the supply is in the UK if the site is in the UK, but outside the scope of UK VAT if the site is overseas. You may have to account for VAT in an EU member state if the place of supply is in the EU. Global custody Global custody services are a package of services that may include safe custody, the collection of dividends or interest on securities held, dealing with scrip and rights issues and payment against delivery of stock. This package of services including the safe custody element is exempt. Services of a share registrar Services of a share registrar may include some or all of the following: all aspects of operating company share registers administration of scrip schemes, share option schemes, profit sharing schemes and dividend reinvestment plans arrangements for advertising the closure of the share offer attending shareholders’ meetings and organising polls at such meetings arranging ‘break out’ for bulk nominee accounts capital gains enquiries, and other correspondence and enquiries conversion of loan stock preparation, designation and despatch of certificates, correction of errors on certificates, and issuing of duplicated documents administrative services in relation to mergers, placings, rights issues, reorganisations and acquisitions processing forms of proxy registration of grants of probate regular reports on share movements administrative services in relation to savings plan schemes This list is not exhaustive. The liability of a share registrar service is taxable at the standard rate of VAT. Listing fees charged by regulatory bodies Fees charged by regulatory bodies, such as the Financial Services Authority, for listing companies that wish to float on an exchange are outside the scope of VAT. Fees charged by stock exchanges Many exchanges charge fees to their members for admission to the exchange, as well as market maker charges, transaction charges and exchange charges. Basic admission or membership charges are taxable at the standard rate, with the place of supply being where the recipient belongs following changes to the place of supply rules introduces on 1 January 2010. The liability of other charges depends on exactly what is being done by the exchange for the charge. If the service is not an intermediary service (see section 9 ) then the fee will be taxable at the standard rate. Arranging the issue or placement of securities If you arrange the issue or placements of securities, whether as offers for sale, rights issues, cash offers, vendor placings or bids with underwritten cash alternatives, including the service of co-ordinating an issue when a number of participants are involved in the share or other placings, your service is exempt. The provision of advice is taxable (Standard Rated) Execution only services If you supply execution only services, for example, buying or selling securities on your client’s instructions, but do not offer advice on securities, your supply is exempt. Dealer systems / Trading Platforms Many transactions in securities are effected by electronic means. If you operate a dealing system that allows a user to insert a bid and offer quotes for securities, another user to insert an acceptance and for the system to match and sell deals, your supply of the dealing system is exempt, but only where you run that system. Data services If you: lease or sell software, or the system itself provide electronic data services that simply provide subscribers with a message facility or an information service, for example on share price movements or financial news your service will be taxable (Standard Rated). -Contains public sector information licensed under the Open Government Licence v3.0.

HMRC Business Risk Reviews are an integral tool used by HMRC to ensure Large businesses are maintaining adequate and robust controls for Tax Reporting and compliance. "Take the heavy lifting out of your role search!" Business Risk Review - Guide on HMRC Business Risk Reviews The Business Risk Review plus (BRR+) is the primary mechanism through which HMRC assesses the tax compliance risk of the UK’s largest and most complex businesses. Under the "plus" model introduced in 2019, the review has shifted from a simple "Low Risk/Non-Low Risk" assessment to a more granular, four-tier rating system. Scope of the Review & Frequency The Business Risk Review + is usually conducted by a Customer Compliance Manager (CCM). It applies to large businesses, meeting one or more of the following: UK Turnover: Over £200 million. Assets: Gross balance sheet assets over £2 billion. Complexity: Smaller businesses that HMRC deems high-risk or complex (e.g., multinational groups). The frequency of these reviews is determined by a company's current risk rating: Low Risk: Usually reviewed every 3 years. Moderate, Moderate-High, or High Risk: Reviewed annually. Risk Categories HMRC assigns one of the following ratings based on the review: Low - HMRC has high confidence in the business's systems and openness. Interaction is minimal. Moderate - Generally compliant but has some gaps in processes or occasional aggressive tax positions. Moderate-High - Significant concerns regarding governance or recurring errors. High - Frequent disputes, poor systems, or lack of transparency. This triggers intense HMRC scrutiny. Assessment Pillars HMRC evaluates the business across all applicable tax regimes including VAT using three standards Systems and Delivery - HMRC reviews your VAT processes and controls to determine if it is robust enough to deliver accurate VAT reporting. Resources - Is the tax team sufficiently staffed and skilled? Technology - Are accounting systems fit for purpose for the business's scale? Accuracy - Is there evidence of repeated basic errors or "failure to take reasonable care Internal Governance - This focuses on management accountability and compliance with statutory regimes. SAO Compliance: Adherence to Senior Accounting Officer (SAO) requirements. Tax Strategy: Is your tax strategy published and followed in practice Uncertain Tax Treatment (UTT): How you identify and notify HMRC of uncertain positions. Internal Policy on VAT Compliance - Basically the business's relationship with HMRC. Transparency: Do you disclose issues in real-time before filing Interpretation: Do you take aggressive positions that push the boundaries of legislation Collaboration: How quickly and accurately do you respond to HMRC queries Low Risk Checklist VAT Risk Matrix - Ensure there is an up to date VAT risk and control matrix that outlines all VAT Team, VAT operational, Finance operational risks and controls and who owns and operates them including frequency of testing the controls. Documented Processes - Ensure all VAT processes and workflows are written down and documented. Real-Time Disclosure - Discuss all complex transactions with HMRC before filing your VAT return. Audit Trail - Ensure there is a robust audit trail for all transactions and manual adjustments for VAT . Note: A "Low Risk" rating is not permanent. HMRC can withdraw it immediately if a serious breach occurs or if the business enters into a tax avoidance scheme.

Disbursements and VAT - Read our Guide on what are disbursements and the HMRC rules and key conditions that apply before costs can be considered a s disbursements. Introduction Disbursements are payments made to suppliers by a business on behalf of its customers and then recharged back to their customers when they invoice them. VAT registered businesses can treat such payments as disbursements for VAT purposes and thus not charge VAT on these costs when billed on to clients. This is on the basis that they are acting as their customers agent and simply making payment for services on their behalf. To be able to do this, a business must ensure they meet the conditions listed below: You paid the supplier on your customers behalf and acted as an agent for your customer Your customer received, used or had the benefit of the goods or services you paid for on their behalf It was your customer’s responsibility to pay for the goods or services, not yours You had permission from your customer to make the payment Your customer knew that the goods or services were from another supplier, not from you You show the costs separately on your invoice You pass on the exact amount of each cost to your customer when you invoice them The goods and services you paid for are in addition to the cost of your own services It’s usually only an advantage to treat a payment as a disbursement if the supplier didn’t charge VAT, or if your customer can’t reclaim the VAT. Note: If a suppliers invoice contains your customers details (Name and address), then you cannot recover any of the VAT as it is not your input VAT. So if a customer asked you to purchase a web hosting service on their behalf and the above conditions are met, then this would be a disbursement for VAT What is not a Disbursement Normal business costs incurred while providing services to customers (postage, Taxi Travel, Airline tickets) and then recharged on to customers etc are not disbursements for VAT purposes as the expenses are for the businesses use and not the customer. If these costs are recharged, then VAT must be added to the invoice to the customer even where the business originally incurred VAT on those costs. So in effect the gross cost (cost incurred including 20% VAT) will be recharged to the customer plus an additional 20 % VAT levied for the direct supply to the customer. -Contains public sector information licensed under the Open Government Licence v3.0. Disbursements and VAT - Guide HMRC Rules and Conditions