Ch 78: Value added Tax (July 2007)

July 2007



78.1 Introduction

Value Added Tax (VAT) became operative in the UK in 1973. It is a tax charged on the final consumption of certain goods or services in the UK, and it includes goods imported into the UK. 

78.2 Her Majesty's Revenue and Customs (HMRC)

HMRC was formed on 18 April 2005, following the merger of the Inland Revenue and HM Customs and Excise. 

HMRC collects direct taxation (paid by individuals or businesses on income earned or capital gained) and indirect taxation (paid on money spent on services or goods.) HMRC also pays out and administers tax credits. 

78. 3 VAT sources of further information

Information on the  general operation of VAT can be found on the HMRC website    

The chapter is divided into parts as follows: 

Part 1 - The calculation and payment of VAT (paragraph 78.4 to 78.21)

Part 2 - VAT General matters (paragraph 78.22 to 78.31)

Part 3 - Responsibilities of the official receiver, liquidator or trustee in bankruptcy in respect of VAT registered insolvent (paragraph 78.32 to 78.76) 

In addition, information and guidance are contained in the following annexes (added September 2012):

Annex A – VAT 769 form

Annex B – PowerPoint training on interpreting ledger codes

The following abbreviations are used in this chapter: 

HMRC - Her Majesty's Revenue and Customs

VAT - Value Added Tax 

VAT Act 1994 - Value Added Tax Act 1994

ICHU – Insolvency Claims Handling Unit


[On to Part 1 - The calculation and payment of VAT]