Businesses are partially exempt for VAT purposes if they make both taxable and exempt supplies. For a description of the types of supplies that are exempt from VAT, see Practice Note: Exemptions from VAT. This Practice Note explains: • when a partially exempt business can recover its input tax • the standard method of calculating the input tax a partially exempt business can recover • the de minimis rules for recovering input tax • how a business carries out an annual adjustment • the standard method override • an overview of special methods of calculating the input tax a partially exempt business can recover • the special method override • the impact of non-business activities on a business's partial exemption position, and • the application of the partial exemption rules to VAT groups For details of the recovery of VAT paid on professional fees (of accountants, lawyers and other advisers) incurred on business sales and acquisitions, share sales and acquisitions, corporate restructurings, and share issues, see Practice Note: VAT recovery on corporate transactions. This Practice

This Practice Note is about the VAT place of supply rules for property transactions and associated services. For information on the place of supply of other services, or of goods, see Practice Notes: VAT place of supply rules—where is a supply made? and VAT place of supply rules—special rules for services. This Practice Note contains references to EU legislation, guidance and case law. For information on the ongoing significance of EU law in the UK following the end of the Brexit implementation period on 31 December 2020, see Practice Note: Retained EU law and tax. Unless otherwise stated, all judgments of the EU Court of Justice referred to in this Practice Note were decided before the end of the Brexit implementation period. Why does this matter? UK VAT is only chargeable if the supply is treated as made in the UK. Otherwise it is outside the scope of UK VAT, but may be subject to VAT in another country. For most services, the position depends on where the parties are established (see Practice

As further explained in Practice Note: What is VAT?, ordinarily: • an amount equal to the VAT due on a supply is paid by the recipient of the supply to the supplier under the agreement in place between them, and • the supplier, in turn, is liable to account for the VAT to HMRC The UK reverse charge is a mechanism which shifts the responsibility for accounting for VAT to HMRC from the supplier to the recipient (ie reversing the obligation). The UK reverse charge mechanism: • alters: ◦ the liability to account for VAT to HMRC, and ◦ in certain circumstances, the timing of the liability to account to HMRC, but • does not change: ◦ the place of supply, or ◦ the amount of VAT due This Practice Note explains: • when the UK reverse charge mechanism on cross-border supplies applies, and • how it works This Practice Note does not cover the special rules that apply a reverse charge to: • certain supplies of gas, electricity,

This Practice Note is about the VAT time of supply rules for property transactions. For an explanation of the general VAT time of supply rules, see Practice Note: VAT time of supply rules—when is a supply made? Why does this matter? VAT is payable to HMRC on the VAT return for the period when the time of supply, or ‘tax point’, arises. If this is before the customer has had to pay the VAT to the supplier, the supplier will be out of pocket and will need to finance the VAT amount. Solicitors need to be aware of when VAT is going to be due to HMRC, in order to ensure that this does not happen, or at least that the client knows it is going to happen. Sometimes it can be a good idea for the parties to negotiate when the VAT amount is paid, in order to manage cashflow for both of them. The time of supply rules can also be relevant in other ways, for example when the VAT rules change, or in determining

Tax analysis: the First-tier Tax Tribunal (FTT) has released a decision about the time of supply of a property for VAT purposes where transfer of a going concern (TOGC) treatment is sought, including where the sale contract has been novated.

This Practice Note is about the issues that arise on a transfer of a going concern (a TOGC) involving land and buildings. It explains the additional conditions that apply, and consideration some further issues that arise on TOGCs involving property, including where the transfer is of a property-letting or property-development business. This Practice Note was produced in partnership with Martin Scammell. A transfer of a going concern (TOGC) has two distinct meanings for VAT purposes: • an ordinary meaning, referring simply to the disposal of an ongoing business—this is relevant, in particular, to the VAT registration position of the buyer, and • a transfer that is treated as a non-supply for VAT purposes, so that in particular no VAT is due on it Both are often referred to as a TOGC, but for the remainder of this Practice Note this term is reserved for the second of these meanings, to refer to a non-supply. There are three main ways in which property might be the subject of, or included in,

The sale of a 'business' is really a sale of assets bundled together. In principle, VAT would therefore be charged on the transfer of each asset in accordance with the normal rules, ie standard rate, reduced rate, zero rate and exemptions applying according to each type of asset, unless the sale of the business is treated as a transfer of a business as a going concern (a TOGC). If the sale of a business is treated as a TOGC it is treated as neither a supply of goods nor a supply of services and is therefore outside the scope of VAT. No VAT is then chargeable on the sale. In order to be treated as a TOGC, the transfer must meet certain conditions that are explained in this Practice Note. If the conditions are met, there are consequences for the buyer and seller that are explained in Practice Note: Consequences of a transfer of a going concern. This Practice Note includes references to EU directives and case law. The UK

The term ‘business’ is a concept which underpins the operation of VAT because: • a person is only liable or entitled to register for VAT (ie is a taxable person) if it makes taxable supplies in the course or furtherance of a business • VAT can only be charged by a person where that person is in business and is registered for VAT and whether a person is liable to register for VAT depends on whether he is a taxable person and therefore in business, and • a person is only entitled to recover VAT where it has incurred such VAT for the purposes of its taxable business It is therefore very important to establish whether or not a person is in business for VAT purposes. Although in many cases it is obvious when a person is in business, this is not always the case. This Practice Note includes references to EU Directives and case law. The UK ceased to be an EU Member State on 31 January 2020.

TEMPORARY MEASURE: A temporary 5% reduced rate of VAT applies to (1) certain supplies of children’s meals, (2) children’s admission to theatres, cinemas, concerts and shows, and (3) all admission tickets to certain attractions suitable for families with children. The temporary reduced rate applies from 25 June 2026 to 1 September 2026. Under the UK's VAT rules, taxable supplies may be charged at the standard rate, or a reduced rate, or may be zero-rated. This Practice Note describes the main categories of zero-rated and reduced rate supplies, and provides some further information on five of the more common types of zero-rated supplies: • food • books and printed materials • construction of buildings, and some sales and leases by property developers • drugs, medicines and appliances, and • clothing and footwear Zero-rated supplies A zero-rated supply is treated as a taxable supply even though no VAT is charged on it. It is therefore different from a VAT-exempt supply. This has two main implications: • a zero-rated supply is taken into account in determining whether

The Voluntary Carbon Markets Integrity Initiative (VCMI) has today launched its Scope 3 Action Code of Practice. The new best-practice framework has been developed to ensure companies continue to take climate action every year, even when their efforts to reduce scope 3 greenhouse gas emissions hit barriers.

FORTHCOMING CHANGE: call for evidence on tax support for entrepreneurs: At Budget 2025, the government published a call for evidence on the impact of existing tax incentive schemes and options to provide further support for entrepreneurs. The call for evidence, which closed on 28 February 2026, seeks to understand the effectiveness of the current EIS and VCT schemes, to explore potential new ways to support scaling companies that have reached the VCT and EIS limits and to gather evidence about how tax policies might seek to encourage different types of investors. Like the enterprise investment scheme (EIS), the venture capital trust (VCT) regime is designed to encourage investment in smaller, higher-risk trading companies. A VCT is a company (not a trust), approved by HMRC, whose shares are admitted to trading in such a way that they meet the listing condition explained in this Practice Note. Individuals can benefit from a range of tax reliefs, and spread their investment risk, by subscribing for (or, in the case of some of those tax reliefs, buying) shares in

FORTHCOMING CHANGE: call for evidence on tax support for entrepreneurs: At Budget 2025, the government published a call for evidence on the impact of existing tax incentive schemes and options to provide further support for entrepreneurs. The call for evidence, which closed on 28 February 2026, seeks to understand the effectiveness of the current EIS and VCT schemes, to explore potential new ways to support scaling companies that have reached the VCT and EIS limits and to gather evidence about how tax policies might seek to encourage different types of investors. Like the enterprise investment scheme (EIS), the venture capital trust (VCT) regime is designed to encourage investment in smaller, higher-risk trading companies. A VCT is a company (not a trust), approved by HMRC, whose shares are admitted to trading in such a way that they meet the listing condition explained in Practice Note: VCTs—VCT conditions for HMRC approval—The listing condition. Individuals can benefit from a range of tax reliefs, and spread their investment risk, by subscribing for (or, in the case of some