A strong VAT control system should clearly identify who is responsible for VAT, document the processes involved and regularly check that controls are working. HMRC also recommends keeping procedures up to date when the business, its systems or the VAT rules change.

Businesses should also review how VAT data moves through their systems. This includes checking tax codes, customer and supplier information, VAT reporting and the use of manual adjustments. For larger businesses, HMRC recommends a VAT risk register to record risks, controls and how their effectiveness is tested.

It is also important to check that controls are working as intended. This could include reviewing a sample of transactions, checking VAT calculations and reconciliations, and investigating any unusual or unexpected results. Any errors or weaknesses identified should be recorded and followed up to reduce the risk of the same problem happening again.

The guidance also covers Making Tax Digital, including ensuring that VAT records are complete and accurate and that digital links between systems work correctly.

While the guidance is aimed particularly at larger and more complex businesses, it provides useful points for any VAT-registered business to consider when reviewing their VAT control system.
 

The temporary 5% reduced rate of VAT introduced for certain children’s meals, tickets and family attractions ended on 1 September 2026. The relief applied from 25 June 2026 and was intended to reduce the cost of selected activities and services for families during the summer holidays.

The relief covered qualifying children’s meals supplied by restaurants, cafés and similar establishments for consumption on the premises, as well as children’s tickets for cinemas, theatres, shows, concerts and exhibitions. It also applied to admission charges for certain family attractions, including theme parks, amusement parks, zoos, museums, soft play centres and observation attractions.

Businesses should now ensure that any relevant supplies made from 2 September 2026 are treated under the normal VAT rules. Tickets purchased during the relief period for admission on or after 2 September are subject to the standard 20% rate. Businesses should also review advance payments and ensure that VAT has been accounted for correctly based on the relevant time-of-supply rules.

The relief did not apply to all family-related purchases. For example, takeaway meals, sports activities and separately supplied goods or services remained subject to their normal VAT treatment. Businesses should therefore retain appropriate records and continue to use the existing VAT guidance when determining the correct liability for their supplies.

Businesses that register for VAT may be able to reclaim VAT paid on certain goods and services purchased before VAT registration. 

There are specific time limits for claiming pre-registration VAT. VAT on goods can generally be reclaimed where the goods are still held by the business or have been used to produce other goods that are still held by the business. The claim must relate to goods purchased within 4 years before the date of registration.

VAT on services can usually be reclaimed where the services were purchased within 6 months before registration. In both cases, the costs must relate to the business that is now registered for VAT and be attributable to its taxable activities.

Pre-registration VAT should be included on the business’s first VAT return. Businesses should ensure they hold valid VAT invoices and records to support the claim, including details of how any business and private use has been calculated.

There are special rules for certain situations, including partially exempt businesses, businesses with non-business income and significant capital assets covered by the Capital Goods Scheme. These rules can affect the amount of VAT that can be recovered.

It is therefore important for businesses to check the pre-registration rules carefully to ensure that all eligible VAT is identified and claimed correctly.