National Statistics

Quarterly VAT statistics background and references

Updated 25 February 2021

The consultation on the reduction and consolidation of HMRC statistics publications, which ran between 8 February 2021 and 12 March 2021, has now closed and the feedback is being analysed.

1. About this release

The Value Added Tax (VAT) Bulletin provides quarterly VAT receipts and trader population data. Total VAT is broken down by net Home VAT and Import VAT. Home VAT is broken down by payments and repayments and the VAT trader population is reported as registrations, de-registrations and the live trader population.

The VAT Bulletin is Crown copyright. The information can be used as long as the source is explained by the user.

The latest Value Added Tax Bulletin was released 30 October 2020. The next will be released 29 January 2021.

2. Coronavirus (COVID-19)

To help businesses manage cash flow during the coronavirus pandemic, VAT traders were able to defer Home VAT payments due between 20 March 2020 and 30 June 2020. Traders are required to repay the full amount by 31 March 2021. Alternatively, instead of paying the full amount by the end of March 2021, traders can opt for a scheme to make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022.

3. VAT

VAT is charged on most goods and services that VAT registered businesses provide in the UK. It is also charged on goods and some services that are imported from countries outside the EU and brought into the UK from other EU countries.

VAT is charged when a VAT registered business sells to either another business or to a non-business customer. When VAT registered businesses buy goods or services they can generally reclaim the VAT they have paid.

The VAT rate businesses charge depends upon their goods and services. Go to VAT rates on different goods and services for detailed guidance about rates.

There are some goods and services that are eligible for exemptions and partial exemptions from VAT.

Go to business tax VAT for more detailed information about VAT.

4. Accounting for VAT

Taxpayers can report VAT returns to HMRC monthly, quarterly or annually. Most submit quarterly returns, with around 95% of VAT payments made by taxpayers using this method. Most of the remaining 5% is from monthly returns. Go to VAT Returns for more information.

Paper returns and cheque payments are due by the last working day of the month after the accounting period. Unless the last working day is a non-working day, when they are due by the previous working day.

Example

If a taxpayers accounting period was January to March, the return and payment would be due by 30 April.

Online returns and electronic payments (excluding Payment on Account (PoA) are given a 7 calendar day extension, and an additional 3 working days for direct debit payments.

Example

If a taxpayers accounting period was January to March, the return and payment would be due by 7 May, with the direct debit requested 3 working days after the 7 May.

The electronic payment extension does not apply to PoA taxpayers. By value, approximately 50% of Home VAT payments are made by PoA.

Every VAT registered business with an annual VAT liability of more than £2 million and accounting for VAT using quarterly returns is required to make PoA. Once taxpayers are in the PoA scheme, they must make interim payments at the end of the second and third months of each VAT quarter.

These interim payments are PoA of the quarterly VAT liability. A balancing payment for the quarter, that is the quarterly liability less the PoA made, is then made through a VAT return.

Changes to the PoA scheme from June 1996 affected the timing of some payments by bringing approximately £850 million worth of payments forward into that financial year. There was then a balancing effect on receipts in subsequent years.

5. VAT Bulletin statistics guidance

HMRC uses 3 main measures for tax revenue:

1. accruals (when the tax liability occurs)
2. declarations (when HMRC is notified of the liability)
3. cash receipts (when tax is paid to HMRC)

All receipts statistics within the VAT Bulletin are on a cash receipts basis. They also relate to cash receipts paid into the Consolidated Fund.

Home VAT statistics on a declared liability basis are reported in the ‘Value Added Tax (VAT) annual statistics’.

Calculated VAT accruals statistics are published within the joint Office for National Statistics (ONS) and HM Treasury (HMT) ‘Public sector finances bulletin’.

There is also differences between VAT Bulletin statistics and the [National Audit Office](https://www.nao.org.uk/ (NAO) audited HMRC Annual reports and accounts because these are reported on an accrued basis.

Types of VAT reported and data sources

Statistics are based upon administrative data sources which go though detailed internal quality assurance before publication.

Total VAT

Total VAT receipts are equal to net Home VAT receipts plus Import VAT receipts. Home VAT is charged on the supply of goods or services in the UK. Prior to April 2015, total VAT receipts were calculated by subtracting other taxes from the Indirect Taxes Consolidated Fund total. The data source for Total VAT is HMRC bank account data, including accounting adjustments to remove penalties and occasional payment errors.

Home VAT

Net Home VAT receipts are equal to Home VAT payments made to HMRC by registered taxpayers minus Home VAT repayments made from HMRC to taxpayers. Taxpayers will make payment to HMRC when their net Home VAT liability is positive and will receive repayments when their net Home VAT liability is negative. Prior to April 2015, Home VAT net receipts were calculated by subtracting Import VAT receipts from Total VAT receipts.

Home VAT liability is defined as the output tax charged on sales (plus any reverse charges) minus the input tax paid on supplies. Statistics on which sectors make overall payments and which receive overall repayments are published within the ‘Value Added Tax (VAT) annual statistics’ (formerly VAT Factsheet).

Home VAT payments and repayments

The data source for Home VAT payments and repayments is HMRC bank account data. Prior to April 2015, Home VAT repayments were calculated by subtracting Home VAT payments from Home VAT receipts. This method attributed any unallocated residual from the Indirect Taxes Consolidated Fund to Home VAT repayments, which averaged approximately plus or minus £100 million each month.

Approximately 70% of taxpayers that regularly receive VAT repayments submit monthly returns. Most of the remaining 30% of VAT repayments are made to traders submitting quarterly returns. The VAT repayments time series also includes VAT refunds.

Import VAT

The following description relates to the system in place for historic receipts. It will be updated in the next edition to reflect the system in place from 1 January 2021.

Import VAT is a transaction tax levied on imported goods from outside the fiscal (VAT) territory of the EU. The data source for Import VAT is the HMRC Customs and Excise Core Accounting System (CECAS). Goods are treated as imported when they arrive in the UK directly and entered into free circulation in the UK, or when goods are removed from a customs suspense arrangements for free circulation in the UK. Go to Imports (VAT Notice 702) for more information.

Approximately 95% of Import VAT is paid through duty deferment accounts. Duty deferment allows importers to pay by direct debit for Import VAT liabilities accrued each calendar month on the fifteenth day of the following calendar month. The remaining 5% is paid with no deferment when the goods are imported. This means that most Import VAT receipts relate to liabilities accrued during the previous month.

Services supplied from outside the UK are not taxed under Import VAT but may be taxed under a Home VAT reverse charge. Go to VAT Notice 741A for more information.

Statistical trends

Total receipts follow a quarterly pattern because of the quarterly pattern of Home VAT payments. VAT registered traders generally account for tax in quarterly staggers. These staggers are uneven and payments generally highest in January, April, July and October.

Most Home VAT repayments and Import VAT payments are accounted for by value on a monthly basis, meaning there isn’t as pronounced of a quarterly pattern for these as there is for Home VAT payments.

Changes to the standard rate of VAT from 17.5% to 15% on 1 December 2008, from 15% to 17.5% on 1 January 2010 and from 17.5% to 20% on 4 January 2011 explain most of the large level changes.

Rate changes do not immediately affect cash receipts because most Home VAT payments are paid quarterly by traders in arrears. Most Home VAT repayments are paid monthly in arrears and most Import VAT receipts are paid by traders monthly in arrears.

Caution should be taken not to put too much emphasis on month to month movements to receipts statistics, as these can fluctuate due to the timing of payments.

Registering for VAT with HMRC

Businesses need to register for VAT when their turnover of VAT taxable goods and services is over the VAT registration threshold. Businesses below the VAT registration threshold may also choose to voluntarily register.

The data source for new registrations and de-registrations is administrative data from the VAT mainframe. VAT mainframe is a central database held by HMRC which contains live information on the VAT population. The live trader population is calculated as the previous month’s live trader population plus any new registrations and minus any new de-registrations.

The Department for Business, Energy and Industrial Strategy (BEIS) publish VAT registrations statistics within their ‘Business population estimates’.

The ONS also publish the ‘Business demography, UK Statistical bulletins’ which contains data on births, deaths and survival rates of businesses.

Although this uses VAT registration data it will not match HMRC registrations statistics because the ONS data includes PAYE registered enterprises and excludes some businesses that would be recorded separately in HMRC data. Further adjustments are also made to the ONS series to better reflect business start-ups and closures and so indicates the number of businesses that are actually trading at any one time. Whereas the HMRC series is a reflection of occurrences of the VAT registration and deregistration process.

6. VAT Bulletin methodology

Rounding

Financial statistics such as total cash receipts are rounded to the nearest million pounds. Other quantities such as trader population are not rounded. Any inconsistency between the totals and their constituent parts, or any inconsistency between the text and the tables, is due to the totals and commentary being calculated using unrounded data.

Revisions

The latest 3 months of data are marked as ‘provisional’ within the data tables.

Statistics which have changed since the previous release are marked as ‘revised’ within the data tables. Revisions are only marked when the finalised figure has changed. As statistics are sourced from administrative data, they are subject to some adjustments, particularly during the initial months after publication.

Total cash receipts are aligned with the National Audit Office (NAO) audited ‘HMRC annual report and accounts’. This can result in adjustments to March statistics to ensure consistency between reported financial year totals. As such, March figures are treated as provisional until aligned with the annual report and accounts.

Data limitations

The VAT Bulletin does not include geographical data on where liabilities occurred, as HMRC does not collect this data from taxpayers. But, HMRC do publish experimental statistics which estimate ‘disaggregated tax receipts’ at country level.

The quality of the VAT Bulletin statistics depends on the purpose they are used for. For understanding cash receipts, repayments and registrations, these statistics are effective as they are based upon related data from registered taxpayers. But they may not be as effective for other purposes as the scope of these statistics is defined by tax law.

The bulletin may also include negative receipts statistics when claims for repayments are larger than payments. Examples of this include VAT cash receipts statistics for April and May 2020 when impacts from the coronavirus pandemic and public health policy measures in response significantly reduced VAT payments.

Pre-release access to statistics

The VAT Bulletin provides no official pre-release access to the statistics. But as these statistics are sourced from administrative data, they may be used within HMRC for operational reasons before publication. HMRC maintains records of those with pre-release access to the department’s National Statistics.

Statistics at HMRC

Go to statistics at HMRC for further information on the departments National and Official Statistics.

7. Contacts

The VAT Bulletin is produced by the Indirect Tax Receipts Monitoring team as part of the ‘Excise duties, VAT and other tax statistics’ collection.

For statistical enquiries, contact:

Simon Taylor
revenuemonitoring@hmrc.gov.uk
03000 536 369

HMRC
Knowledge, Analysis and Intelligence (KAI)
Floor 2 Annex
Albert Bridge House
Manchester
M60 9AF

For media enquiries see HMRC press office.

Taxpayers can also contact HMRC about general VAT enquiries.

8. Publication calendar

The VAT Bulletin is published on the last working day of the month in January, April, July and October. The bulletin is never published during the weekend or on a Monday. During months when the last working day is a Monday, the bulletin is published on the previous Friday.

From April 2020, the bulletin has been published on GOV.UK. Go to UK Trade Info for archived versions of the bulletin since 2008.

Go to research and statistics for future VAT Bulletin release date announcements. Announcements are published no later than 4 weeks before the release date.

9. User engagement

HMRC welcomes user engagement to improve the departments National and Official Statistics. You can contact statistics producers on GOV.UK.

We consulted users about indirect tax receipts statistics from 20 November 2015 to 5 February 2016.

10. National Statistics

The United Kingdom Statistics Authority (UKSA) has given these statistics National Statistics status. This means that the statistics comply with the Code of Practice for Statistics as set out within the Statistics and Registration Service Act 2007.

National Statistics status can generally be interpreted to mean that statistics:

• meet user needs
• are effectively communicated and accessible
• undergo regular quality assurance reviews
• produced professional and according to sound methods
• managed impartially in the public interest and free of political interference

Contact UKSA for queries about National and Official Statistics.

11. Related statistics

The ‘HMRC tax receipts and National Insurance contributions for the UK’ National Statistics provide the first provisional snapshot of cash receipts statistics each month. Part of the HM Revenue and Customs receipts statistics collection.

The HMRC ‘Measuring tax gaps’ Official Statistics estimate the tax gap^{[footnote 1]} for all taxes and duties administered by the department.

HMRC publish the ‘Tax ready reckoner’ Official Statistics which show the estimated direct impact on HMRC tax revenues if simple changes were made to various taxes. They are intended to assist researchers and policymakers.

The independent Office for Budget Responsibility (OBR) forecast tax receipts within their ‘economic and fiscal outlook’ publications.

1. Tax gaps are the difference between tax collected and that, which in HMRC’s view, should be collected. ↩