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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
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Specific receipts: refunds of sums paid as VAT: finding the right guidance - flowchart

This is direct tax guidance; for indirect tax guidance, refer to VAT Guidance.

You may come across a number of different types of refund of a sum paid as VAT.

The VAT receipts flowchart (Word 160KB) will help you identify the appropriate guidance for the more commonly encountered scenarios.

The flowchart does not cover capital allowances or capital gains questions.

Terms used

Space is limited in the flowchart so:

‘Received by’ is used in the flowchart to mean ‘received by and recognised in the accounts in accordance with GAAP’.

‘PCR’ is used in the flowchart to mean post cessation receipt.

You may find it easier to follow the flowchart in this tabular format.

Question 1 Refund received by original trader? YES - Go to Question 2.
NO - Go to Question 3.      
       
  Question 2 Trader continues to trade? YES - Taxable as a trade receipt: BIM40170.
NO - Taxable as a PCR: BIM40170.      
  Question 3 Received by successor? YES - Go to Question 4.
NO - Go to Question 5.      
  Question 4 Successor continues to trade? YES - Taxable as a trade receipt: BIM40170.
NO - Taxable as a PCR: BIM40170.      
  Question 5 Received for providing services? YES - Go to Question 6.
NO - Go to Question 7.      
  Question 6 Receipt of management services trade? YES - Taxable in full as a trade receipt: BIM40178.
NO - Received because of right to claim: taxable as miscellaneous income: BIM40182.      
  Question 7 Received as a receipt from a trade that has ceased? YES - Taxable as a PCR: BIM40180.
NO - Received because of right to claim: taxable as miscellaneous income: BIM40182.