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VAT Dispute Solicitors

A VAT assessment from HMRC can run to hundreds of thousands of pounds. A solicitor with expertise in VAT law and the tax tribunal process can challenge the assessment, negotiate the settlement, and in many cases substantially reduce the liability.

VAT disputes arise across a wide range of scenarios — HMRC assessments disallowing input tax claims, disputes over whether a supply is VATable or exempt, challenges to the VAT liability of specific transactions, default surcharge and late payment penalties, HMRC carousels and missing trader fraud allegations, and disputes over the VAT treatment of land and property. The VAT rules are complex and the sums in dispute are often significant. A solicitor will analyse the legal basis for HMRC's position, identify weaknesses in the assessment, and challenge it through the HMRC internal review process and, where necessary, the First-tier Tax Tribunal.

VAT assessments & input tax disputes Exempt vs taxable supply disputes Default surcharge & penalty appeals Free initial consultation

VAT Disputes — Key Issues

VAT disputes — the situations most commonly contested with HMRC and how a solicitor addresses each one.

VAT disputes span everything from input tax claims denied on technical grounds to fundamental questions about whether a supply is taxable at all. A solicitor will identify the correct legal position and present it compellingly to HMRC and the tribunal.

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HMRC VAT assessments — challenging the basis and the amount

HMRC can raise a VAT assessment where it believes the VAT return understates the VAT due — typically following a VAT inspection or compliance review. A VAT assessment must be raised within 4 years of the accounting period in which the under-declaration occurred (or 20 years where fraud is alleged). A solicitor will review the basis of the assessment — the method HMRC used to calculate the additional VAT — and challenge it where the method is incorrect, the evidence is insufficient, or the period is out of time. A business that disagrees with a VAT assessment must appeal within 30 days of the assessment or the HMRC review conclusion, or the right to appeal is lost.

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Input tax disputes — reclaiming VAT that HMRC has disallowed

Input tax (the VAT paid on purchases) can be reclaimed where: the supply was made to the business for use in its VATable business activities; the VAT invoice meets the statutory requirements; and the business can produce the invoice as evidence. HMRC disallows input tax claims where it considers the supply was used for non-business or exempt purposes; where it suspects the invoice is false or associated with a Missing Trader Intra-Community (MTIC) fraud; or where the invoice does not meet the legal requirements. A solicitor will challenge the disallowance — presenting the evidence that the business had no knowledge of any fraud and took all reasonable steps to verify the supply chain.

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VAT exemptions and reduced-rating disputes

Certain supplies are exempt from VAT (financial services, insurance, healthcare, education, residential property lettings) or reduced-rated at 5% (domestic fuel and power, energy-saving materials, children's car seats). Where a business treats a supply as exempt or reduced-rated and HMRC disagrees, a VAT assessment and late payment interest follows. VAT liability disputes often turn on the precise characterisation of the supply — whether the supply is a single composite supply (taxed at the rate of the principal element) or multiple separate supplies (each taxed at its own rate). A solicitor will analyse the nature of the supply, apply the relevant VAT legislation and HMRC guidance, and challenge HMRC's characterisation at the tribunal where it is wrong.

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VAT and land and property — complex liability questions

The VAT treatment of land and property transactions is notoriously complex — some are exempt (most supplies of land and buildings), some are standard-rated (new commercial buildings, commercial property with an option to tax elected), and some are zero-rated (new residential construction, certain conversions). The option to tax (formerly the election to waive exemption) makes supplies of commercial property taxable — with significant consequences for the buyer's ability to recover input tax and for the VAT cost on the transaction price. A solicitor will advise on the VAT treatment of specific property transactions, challenge HMRC where it has incorrectly characterised the liability, and manage the consequence of disputed option to tax positions.

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Default surcharge and VAT penalty appeals

The VAT default surcharge applies where a VAT return or payment is late — the surcharge rate escalates from 2% to 15% on repeated defaults. The VAT late payment interest and penalty regime introduced in 2023 applies a first-year default penalty of 2%, escalating to 4% after 15 days, and ongoing late payment interest. A solicitor will appeal a surcharge or penalty where the business has a reasonable excuse for the late payment or return — including: unexpected business difficulties; bank or IT system failures; a bereavement; or HMRC's own processing error. The appeal must be made within 30 days of the surcharge notice. Where the surcharge or penalty is large, expert legal representation at the First-tier Tribunal significantly improves the prospects of a successful appeal.

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VAT registration and deregistration disputes

Businesses must register for VAT when their taxable turnover exceeds the registration threshold (currently £90,000 in any 12-month period). HMRC can compulsorily register a business it believes has exceeded the threshold and raise a VAT assessment for all the VAT that should have been charged and remitted. Where HMRC raises a compulsory registration assessment, the business can appeal on the basis that it did not exceed the threshold in the relevant period, or that it was entitled to the two-year look-back exception. A solicitor will challenge the basis of HMRC's threshold calculation, present the evidence that the business's taxable turnover did not exceed the registration threshold, and appeal to the First-tier Tribunal where HMRC maintains its position.

How It Works

A VAT assessment is not the final word — it can be reviewed internally by HMRC and appealed to the First-tier Tax Tribunal. A solicitor will identify the grounds, manage the process, and substantially improve the prospects of a successful challenge.

A solicitor will analyse HMRC's assessment, identify any legal or factual errors, advise on the prospects of a successful appeal, and manage the appeal through the HMRC review process and, where necessary, the First-tier Tax Tribunal.

Submit Your Request
1

Tell us about the VAT dispute

Describe the HMRC decision or assessment — the VAT type, the amount, the period, and the basis of HMRC's challenge.

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Solicitor analyses the legal basis and advises on prospects

A VAT specialist reviews HMRC's decision, assesses the legal basis, identifies grounds of challenge, and advises on the most effective route to resolution — review, negotiation, or appeal.

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Free initial consultation

You receive clear advice on the VAT dispute and the strength of the challenge available — at no cost and no obligation.

Free Initial Consultation

A VAT assessment left unchallenged becomes payable with interest. A solicitor identifies whether the challenge is worth making — and pursues it if it is.

Get specialist VAT dispute advice — and find out whether HMRC's assessment or decision can be reduced or overturned on appeal.

Challenge My VAT Assessment

Common Questions

VAT disputes — what people ask us.

How do I appeal a VAT assessment from HMRC?

A VAT assessment can be appealed by requesting an HMRC review (within 30 days of the assessment) or by appealing directly to the First-tier Tax Tribunal (within 30 days of the assessment, or 30 days after the review conclusion if a review was requested). An appeal to the First-tier Tribunal must be notified on a specified form, setting out the grounds of appeal. A solicitor will advise on the strength of the appeal, prepare the grounds, and manage the appeal from notification through to hearing — including the exchange of witness statements, expert evidence (where required), and skeleton arguments. The tribunal can increase, maintain, or reduce the assessment.

HMRC is alleging my business was involved in VAT fraud through its supply chain. What should I do?

Missing Trader Intra-Community (MTIC) fraud — carousel fraud — involves the fraudulent reclaim of input VAT by businesses in a supply chain where one trader disappears without accounting for the VAT. Where HMRC alleges that a business knew or should have known that its transactions were connected to MTIC fraud, it disallows the input tax. Disallowance for knowledge or means of knowledge of fraud is a serious allegation. A solicitor will challenge HMRC's evidence — the due diligence the business undertook on its suppliers, the price at which goods were acquired, and the commercial plausibility of the transactions. A successful challenge at the tribunal can be worth very significant sums in recovered input tax.

What is the VAT default surcharge and when does it apply?

The VAT default surcharge (for VAT periods before 2023) applies where a VAT return or payment is late. The first default puts the business in a 12-month surcharge liability period. A second default during the surcharge period triggers a surcharge of 2% of the VAT due; further defaults escalate the surcharge rate to 5%, 10%, and 15%. From 2023, the default surcharge has been replaced by a points-based late filing penalty (points accumulate, a penalty is triggered at a threshold) and a new late payment interest and penalty regime. A solicitor will advise on whether the surcharge or penalty is correctly charged and whether a reasonable excuse appeal is available — and manage the appeal process.

Is my supply exempt from VAT or taxable?

The VAT liability of a supply depends on the nature of the supply, the identity of the supplier and recipient, and in some cases the use to which the supply is put. Many disputes arise at the boundary between exempt and taxable supplies — particularly in healthcare, education, financial services, and land and property. The correct categorisation requires careful analysis of the supply, HMRC guidance, and case law — including EU VAT Directives and the decisions of the European and UK courts on the scope of exemptions. A solicitor will advise on the correct VAT treatment of the supply, assist with obtaining HMRC's formal opinion by way of a VAT Ruling, and challenge any incorrect HMRC decision.

HMRC is threatening to deregister my business for VAT. Can it do this?

HMRC can cancel a VAT registration where it believes the business is no longer making taxable supplies or no longer meets the conditions for registration. Deregistration can have significant commercial consequences — particularly for businesses that recover substantial input VAT on capital expenditure. Where HMRC proposes to deregister the business, the business has a right to appeal the deregistration decision. A solicitor will assess whether the deregistration is correct, advise on the grounds of appeal, and challenge the decision where the business meets the conditions for registration. Where voluntary deregistration is appropriate (turnover has fallen below the deregistration threshold), a solicitor will advise on the consequences and assist with the application.

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