1. Reclaiming VAT on on-street meter parking. You can reclaim VAT without a receipt on certain purchases of £25 or less (see section 19.5.5 of VAT Notice 700), if you can show that the supplier is VAT-registered. On-street parking is not subject to VAT so no VAT can be reclaimed. If in doubt, do not claim VAT without a valid VAT receipt or invoice.
2. Recovering VAT on UK business entertainment. You cannot recover input tax incurred on the provision of business entertainment expenses. Business entertainment is not the same as employee entertainment. Find out more.
3. Failing to meet the requirements to zero rate exports. If you export goods to a customer outside the UK, or outside the EU from Northern Ireland, your supply is normally zero-rated provided that you meet the appropriate conditions. 
4. Incorrectly reclaiming VAT twice on a purchase. A request for payment or proforma invoice is not a valid VAT invoice and it cannot be used to reclaim VAT as input tax. In order to recover VAT charged on goods and services, the business must have a proper tax invoice or tax receipt. (See Section 19.5 of VAT Notice 700.)
5. Charging the wrong VAT rate on sales. Businesses should charge VAT at the standard rate of VAT unless it is clear that the transaction is either liable to VAT at the reduced rate, the zero-rate, or is exempt. The supply of some services fall outside the scope of UK VAT under the place of supply rules. See 3 for the rules regarding the export of goods.
6. Misunderstanding the correct VAT treatment of a land and property transaction. The supply of land (including an interest in, right over, or licence to occupy) is normally exempt from VAT, but there are many exceptions (see VAT Notice 742). Specialist advice should generally be sought when dealing with land and property.
7. Claiming VAT on mileage but failing to keep a VAT receipt. Businesses are required to keep a VAT receipt for fuel purchased in order to reclaim VAT on business mileage. See Section 9 of VAT Notice 700/64.
8. Failing to repay VAT recovered on purchases when supplier has not been paid for over 6 months. If a business has not paid a supplier invoice for over 6 months, they are required to repay to HMRC any VAT previously recovered as input tax on that supply until the supplier has been paid. See Section 4 of VAT Notice 700/18.
9. Incorrectly recovering import VAT shown on the import agent's invoice. Most UK VAT-registered businesses will use postponed VAT accounting to account for import VAT on imported goods. However, those that do not can only recover import VAT on an official document, called an 'Import VAT certificate' or 'C79', which is usually issued by HMRC. VAT cannot be claimed on the invoice issued by the import agent or freight forwarder as the invoice shows a breakdown of the charges paid on behalf of the importer. It is not a VAT invoice.
10. Misunderstanding the VAT treatment of 'management charges'. If the business is in a VAT group with other companies, then any charges issued between members of the VAT group are disregarded for VAT purposes. If the management charge is issued to an overseas company, the business will need to determine whether the services supplied are liable to UK VAT or whether the overseas company needs to account for any VAT due under the reverse charge mechanism.

Reviewed and updated: 26 Feb 2025.

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