UK VAT Updates: 17 August 2026 — Issue 79

Welcome from Jane

August may traditionally be the month when everyone tries to leave their inbox alone for five minutes, but VAT has other ideas.

Welcome to Issue 79, bringing together the most important UK VAT updates for August 2026. This issue brings an interesting First-tier Tribunal decision involving Tapi Carpets and the VAT treatment of independent fitting services. The Tribunal accepted that the retailer was acting as an intermediary rather than buying in and resupplying the fitting service. It is a useful reminder that labels such as “agent” and “principal” matter rather less than whether the contracts, payment arrangements and commercial reality actually support them.

There is also a very immediate deadline. The temporary 5% VAT rate for qualifying children’s meals, tickets and family attractions ends on 1 September 2026. Businesses using the relief need to make sure their systems and pricing are ready, but they also need to understand some fairly specific rules governing advance ticket sales and admissions after the relief finishes. HMRC’s Revenue & Customs Brief 5 (2026) was substantially expanded on 27 July to deal with matters including agents, ticket platforms, party packages, free-meal promotions and prepayments.

Property advisers have another date for the diary; 18 August 2026. That is the closing date for the Government’s consultation on a proposed new zero rate for sales of bare land intended for social housing. If implemented well, it could remove some of the awkward VAT timing and cashflow issues created by the present “golden brick” model. As ever with property VAT, removing one complication will depend heavily on what replaces it.

And for businesses with French operations, 1 September 2026 also marks the first major stage of France’s mandatory electronic invoicing regime.

There is plenty to look at, so I shall get on with it.

Jane Deeks LLB (Hons), CTA
VAT Specialist, Founder and CEO

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VAT News Round-up

Summer 5% VAT Rate 2026: What Businesses Must Do

The temporary reduced rate applies to specified supplies of:

• qualifying children’s meals;
• children’s admission to cinemas, theatres, concerts, exhibitions and shows; and
• admission for all customers to specified family attractions.

The relief runs from 25 June to 1 September 2026 inclusive. The supplies would otherwise generally be standard-rated, unless an existing exemption applies.

HMRC expanded Revenue & Customs Brief 5 on 27 July 2026 to cover a number of practical areas, including sales through agents and ticket platforms, party packages, free-meal promotions, prepayments and the Flat Rate Scheme.

Practical point

Do not simply schedule the till to change from 5% to 20% and consider the job finished. Review bookings, advance ticket sales, packages, vouchers, refunds and any transactions spanning 1 and 2 September.

Proposed VAT Zero Rate for Social Housing Land

HM Treasury and HMRC are consulting on a new zero rate for sales of land intended for the construction of social housing.

The proposal is intended to address circumstances where a social housing provider currently has to wait until construction reaches the necessary stage before the first grant of a major interest can qualify for zero-rating, commonly referred to as reaching “golden brick”.

The consultation is expressly considering whether allowing qualifying bare land to be sold at the zero rate could accelerate development and improve cashflow. It closes on 18 August 2026.

Practical point

Housing associations, developers, landowners and advisers should watch this carefully. The eventual conditions attached to the relief will be every bit as important as the headline zero rate.

VAT Registration Threshold: The Rolling 12-Month Test

The compulsory VAT registration threshold remains £90,000 of taxable turnover.

The important word is rolling. Registration is not tested by reference to the accounting year. A business must consider taxable turnover at the end of each month by looking back over the preceding 12 months. There is also a separate test where taxable turnover is expected to exceed £90,000 in the next 30 days alone.

Practical point

Build the rolling VAT threshold calculation into monthly or quarterly management reporting. Discovering six months later that the client crossed the threshold is usually where VAT advice turns into VAT archaeology.

Case Law Updates

Tapi Carpets v HMRC [2026] UKFTT 1128 (TC): Agent or Principal for Fitting Services?

A significant new First-tier Tribunal decision concerns the arrangements used by Tapi Carpets when customers purchasing flooring also wanted it fitted.

Tapi maintained a pool of independent fitters and offered customers a fitting-arrangement service. Where the customer used that service, Tapi arranged for an independent fitter to attend. The fitting charge itself was paid directly by the customer to the fitter.

Tapi treated itself as an intermediary in relation to the fitting. In other words, Tapi supplied the flooring and an arrangement service, while the fitter separately supplied the installation service to the customer.

HMRC disagreed. Its position was that the fitter supplied the fitting service to Tapi and that Tapi then made an onward supply of both the flooring and the installation to the customer.

The First-tier Tribunal found in Tapi’s favour.

The contractual arrangements supported the proposition that Tapi was arranging the fitting on behalf of the customer, while responsibility for carrying out the installation sat with the independent fitter. The Tribunal considered the economic and commercial reality to be consistent with those contracts.

That conclusion meant the fitting service was supplied by the fitter directly to the customer rather than being bought and resold by Tapi.

Tapi’s current published customer terms are consistent with this structure: they expressly state that Tapi acts as the customer’s agent in arranging the fitting, that a separate contractual relationship arises with the independent fitter and that fitting is paid directly to that fitter.

Jane’s view

This case is much more useful than its carpet-shop setting might initially suggest.

Agent-versus-principal disputes arise in all sorts of sectors: healthcare, education, online platforms, recruitment, property management and professional services among them.

What matters is not simply inserting the word “agent” into the terms and conditions. The contracts, invoicing, payment flow, responsibility for performance and what actually happens commercially all need to point in the same direction.

Calling yourself an agent while behaving like the principal is unlikely to end well. HMRC has seen that particular rug pulled before.

Charge My Street — HMRC continues to challenge the EV charging decision

Charge My Street Ltd [2026] UKFTT 00318 (TC)
First-tier Tribunal (Tax Chamber)

Charge My Street concerned the VAT treatment of electricity supplied through public electric vehicle charge points.

The FTT allowed the taxpayer’s appeal, but HMRC does not accept the decision and is seeking permission to appeal to the Upper Tribunal. HMRC has maintained its policy that electricity supplied at public EV charging points is standard-rated.

HMRC set out that position in Revenue & Customs Brief 4 (2026). Businesses should therefore be cautious about treating the FTT decision as the end of the matter.

Jane’s view

This is a good example of why winning at the FTT does not necessarily mean the practical VAT treatment changes overnight.

Until the appellate position is clearer, advisers need to distinguish carefully between what the FTT decided and the treatment HMRC continues to require.

VAT cases to watch

There are several VAT cases moving through the appellate system.

Of particular interest:

• Charge My Street Ltd — HMRC is seeking permission to appeal the reduced-rating decision concerning public EV charging.
• Ingliston Driving Experiences Ltd — HMRC’s appeal concerning the temporary reduced VAT rate was listed for hearing on 27 July 2026 and the decision is awaited.
• Realreed Ltd — an Upper Tribunal hearing concerning VAT and serviced accommodation is currently listed for 19–21 October 2026.
• Bottled Science Ltd — the Upper Tribunal is due to consider whether a collagen drink falls within the VAT treatment of food in October 2026.

These are matters to watch rather than reasons, at this stage, to rewrite client VAT policies.

HMRC Updates

Revenue & Customs Brief 5 (2026) — summer reduced rate expanded guidance

HMRC substantially updated its temporary summer VAT guidance on 27 July 2026.

The additional material deals with practical issues including:

• ticket platforms and agents;
• party packages;
• free-meal promotions;
• prepayments; and
• Flat Rate Scheme businesses.

The relief ends on 1 September 2026.

VAT Exemption for Locum Doctors: HMRC Brief 6 (2026)

HMRC published Revenue & Customs Brief 6 (2026) on 17 July 2026 following the First-tier Tribunal decision in Isle of Wight NHS Trust and others.

HMRC confirms that it has not appealed the FTT decision.

The FTT held that the exemption in Item 5, Group 7, Schedule 9 VATA 1994 was capable of applying to supplies of locum doctors by employment businesses, rather than being restricted to traditional out-of-hours deputising arrangements.

Businesses that previously accounted for output VAT on affected supplies may be able to make claims for overdeclared VAT, subject to the normal four-year time limits, unjust enrichment considerations and any corresponding partial-exemption/input-tax adjustments.

Practical point

Agencies supplying locum doctors and healthcare bodies receiving those services should review both current VAT treatment and the historic position. A repayment claim should not be calculated in isolation from the associated input-tax consequences.

Property VAT Spotlight

Could “golden brick” finally have some competition?

The Government is consulting on a new VAT zero rate for sales of bare land intended for the construction of social housing.

Under the present system, land is generally exempt unless an option to tax makes the transaction taxable. There are circumstances in which an option can be disapplied for land intended for relevant residential use, but an exempt sale can leave the seller unable to recover associated VAT.

The first grant of a major interest in a newly constructed dwelling can, of course, qualify for zero-rating. This has given rise to the familiar “golden brick” structure, where the transaction is delayed until sufficient construction has taken place for the interest being transferred to relate to a new dwelling rather than simply bare land.

The Government is now considering whether targeted zero-rating of the land itself could enable registered social housing providers to acquire sites earlier without creating an irrecoverable VAT cost.

That could potentially simplify transactions and improve development cashflow, but there are some obvious design questions:

• What exactly will qualify as “social housing”?
• Who must acquire the land?
• What evidence will the seller need?
• What happens if the intended development changes?
• Will there be clawback provisions?
• How will mixed developments be treated?
• What happens where only part of a site is ultimately used for social housing?

Jane’s view

The proposal is welcome, particularly because the existing VAT outcome can influence the timing and structure of a land transaction for reasons that have very little to do with the commercial development itself.

But the success of the relief will depend on the conditions. A zero rate accompanied by an Olympic-sized certificate and clawback regime would rather miss the point.

The consultation closes on 18 August 2026.

How we can help property businesses please follow the link below:

https://deeksvat.co.uk/industries/land-property/

International VAT Update

France Electronic Invoicing Requirements from September 2026

France reaches the first major stage of its mandatory electronic invoicing reforms on 1 September 2026.

From that date:

• all French businesses within the regime must be capable of receiving electronic invoices;
• large businesses and intermediate-sized businesses must issue electronic invoices; and
• those larger businesses also enter the corresponding e-reporting requirements.

Smaller and micro businesses move into mandatory issuance from 1 September 2027.

Businesses will use approved electronic invoicing platforms rather than simply emailing PDFs between finance teams.

Practical point

UK groups with French establishments or operations should confirm now which entities are affected, which platform will be used and whether the underlying VAT coding and master data are ready.

Digitising the wrong VAT treatment merely allows the mistake to travel faster.

How we can help with international VAT issues:

https://deeksvat.co.uk/services/international-vat/

Feature Article

The 1 September VAT Deadline — Ending the Summer 5% Rate Correctly

The relief was deliberately short

The Government introduced a temporary 5% VAT rate for certain family-focused supplies from 25 June to 1 September 2026 inclusive.

It covers specific:

• children’s meals supplied as catering;
• children’s cinema, theatre, concert, exhibition and show admissions;
• qualifying family tickets; and
• admission to specified family attractions.

It is not a general hospitality or leisure VAT reduction.

That distinction matters when businesses start reversing their systems in September.

Admission after 1 September — watch this carefully

One particularly important point in HMRC’s updated guidance concerns advance ticket sales.

For qualifying attractions, tickets bought during the temporary period for admission on or after 2 September 2026 remain subject to the standard rate.

HMRC also states that payments received for rights of admission taking place after the relief ends are subject to the standard rate.

That means a business should not assume that collecting payment in August automatically secures the 5% rate for a September visit.

Prepayments for visits during the relief period

The position can operate differently where advance payments were taken for qualifying admissions taking place during the relief period.

HMRC’s change-of-rate guidance allows businesses, in specified circumstances, to apply the lower rate to qualifying prepayments, including certain payments received before the legislation came into force.

Where VAT has already been accounted for at the standard rate and a business elects to use the reduced rate, appropriate adjustments may be required. HMRC also expects any resulting VAT saving on a consumer prepayment to be passed back to the customer.

Children’s meals — check what is actually being sold

The 5% rate does not apply to every small meal eaten by somebody under 18.

The meal must be held out for sale only as a children’s meal and supplied in the course of catering for consumption on the premises.

HMRC says the test looks at how the meal is marketed, presented and priced.

A cheaper or smaller version of an adult meal does not automatically become a qualifying children’s meal simply because somebody has written “kids” next to it on the till.

Family tickets

For cinemas, theatres and similar events, separately sold adult admissions remain subject to their normal VAT treatment.

However, where a genuine family ticket is held out for sale for a single price and includes at least one child, HMRC accepts that the whole qualifying family ticket can benefit from the reduced rate during the relief period.

Packages need separate analysis

The July update also deals with packages.

Businesses may sell:

• admission plus food;
• admission plus merchandise;
• birthday or party packages;
• family bundles;
• optional upgrades; or
• tickets through online agents.

Whether there is a single supply, multiple supplies or a need for fair and reasonable apportionment depends on the particular arrangement.

The temporary reduced rate should not be stretched across standard-rated goods or services simply because they share the same booking reference.

Worked example

Assume a qualifying family attraction sells 1,000 tickets at £21 each including VAT for visits taking place within the relief period.

At 5%:

Gross sales: £21,000
VAT fraction: 1/21
VAT: £1,000
Net income: £20,000

Now compare £21,000 of equivalent VAT-inclusive receipts subject to the 20% standard rate:

Gross sales: £21,000
VAT fraction: 1/6
VAT: £3,500
Net income: £17,500

The VAT difference is £2,500 on the same gross sales.

For businesses that chose not to change consumer prices during the relief period, getting the liability wrong can therefore have a very direct impact on margin.

Refunds and credit notes

Businesses should also review what happens when an August transaction is refunded or adjusted in September.

The accounting system needs to retain enough information to identify the VAT treatment of the original supply. Automatically applying the VAT rate in force on the day somebody presses the “refund” button is not a VAT policy.

Evidence remains important after the relief disappears

Businesses should retain evidence supporting the 5% treatment, including:

• children’s menus;
• ticket descriptions;
• website screenshots;
• pricing;
• marketing material;
• booking records;
• system VAT codes;
• package details; and
• calculations supporting any apportionment.

A temporary relief does not mean HMRC has a temporary enquiry window.

Action plan

Affected businesses should now:

• identify every product or service using the temporary 5% VAT code;
• confirm that each supply genuinely qualifies;
• identify bookings and admissions around 1 and 2 September;
• separately review advance ticket sales for visits after 1 September;
• check packages and mixed supplies;
• check agents and ticket platforms;
• update tills, websites, booking systems and accounting software;
• establish the correct process for refunds and credit notes;
• retain supporting evidence for the relief period; and
• closely reconcile the first VAT return containing transactions from both sides of the change.

Who should review their position?

In particular:

• restaurants and cafés offering children’s meals;
• cinemas and theatres;
• family attractions;
• amusement and theme parks;
• museums and similar attractions where admission is taxable;
• zoos and animal attractions;
• soft-play and indoor family attractions;
• ticketing businesses and intermediaries;
• tourism and leisure groups; and
• accountants advising businesses in these sectors.

Jane’s view

VAT rate changes usually create problems at the edges.

Nobody struggles to decide whether a qualifying visit on 10 August falls within the relief. It is the August booking, September visit, bundled meal, voucher and subsequent refund that earn their place in the VAT file.

The rate might be temporary. The correction work has an unfortunate tendency not to be.

Jane’s Practical VAT Tip

When a temporary VAT rate ends, run a transaction report covering at least the seven days before and after the change.

Include:

• supply or admission date;
• payment date;
• invoice date;
• VAT rate;
• gross value; and
• any subsequent credit or refund.

It is a simple control, but it can identify transactions that an ordinary VAT return review will never make obvious.

Ask Jane

“My turnover has dropped below £90,000. Can I deregister for VAT?”

Possibly; but £90,000 is the compulsory registration threshold, not the deregistration threshold.

The deregistration threshold is £88,000

More importantly, I would never make the decision based solely on the turnover figure.

Before deregistering I would consider:

• future taxable turnover;
• VAT on assets held at deregistration;
• property options to tax;
• Capital Goods Scheme implications;
• input VAT previously recovered;
• expected capital expenditure;
• customer profile; and
• whether remaining voluntarily registered is commercially beneficial.

For a property-owning business in particular, cancelling the VAT registration can be the beginning of the analysis rather than the end.

Planning Opportunity

Review agency arrangements before HMRC does

The Tapi Carpets decision is a timely reminder for any business operating an agent or intermediary model.

If the VAT result depends on the business acting as agent, review:

• customer terms and conditions;
• supplier/provider agreements;
• who sets the price;
• who invoices;
• who receives payment;
• who is legally responsible for performing the service;
• who deals with complaints and refunds;
• how the arrangement is described to customers; and
• what actually happens in practice.

The contract and the commercial reality need to tell the same story.

That is particularly relevant to:

• recruitment and healthcare agencies;
• tutoring businesses;
• property management companies;
• online marketplaces;
• booking platforms; and
• businesses arranging third-party services.

A carefully drafted agency clause is useful. A carefully drafted agency clause contradicted by everything the business actually does is considerably less so.

Closing Remarks

Issue 79 contains a common thread: VAT treatment follows the substance of what is actually happening.

That is evident in Tapi Carpets, where the contractual and commercial arrangements were central to deciding who supplied the fitting service.

It is equally true of the temporary summer rate, where businesses need to establish exactly what has been sold, when the qualifying admission takes place and whether a package contains more than one supply.

And in property, the proposed social-housing land relief is another reminder that the timing and legal structure of a transaction can transform its VAT consequences.

As ever, if you or a client would like help reviewing the VAT position, please contact me at jane@deeksvat.co.uk.

This newsletter provides general information only and is not a substitute for advice based on the full facts. VAT treatment can depend on detailed contractual, factual and statutory conditions.