Weekly VAT News

VAT and overage payments – HMRC manual

HMRC have issued new guidance in their internal VAT Land and Property Manual setting out their view on the VAT treatment of overage payments. Overage payments are additional payments made by the purchaser of a property after the purchase has been completed, generally to reflect an increase in the property’s value and which cannot be determined at the time of sale. An example of a trigger for an overage payment would be the granting of planning permission. HMRC consider that the VAT liability of overage should be considered separately from the VAT liability of the initial sale. HMRC notes that with respect to freehold sales, to the extent that consideration is not determinable at the time of supply, the land is treated for VAT purposes as separately supplied when consideration is received or a VAT invoice issued (whichever is earlier). Accordingly, HMRC’s policy is that the VAT liability of an overage payment will generally be determined at the time of supply of the overage payment, rather than when the original land sale completed. This would mean that, for example, where opted to tax land has been sold and dwellings have been constructed when the overage is paid, the option to tax can be excluded in relation to the overage payment. However, HMRC state that this does not apply to freehold sales of ‘new’ (less than three years old) commercial buildings, for which special rules apply, which mean that the VAT liability applicable to the overage is determined with reference to the description of the land at the original time of supply. (Contact: Ben Tennant)

Jumpman Gaming Ltd: Remote gaming duty – FTT

The First-tier Tribunal has considered the application of remote gaming duty (RGD) to free spins on ‘spin the wheel’ games offered by Jumpman Gaming Ltd. The FTT distinguished between the provision of a free game (played without payment by anyone) and being allowed to play a game for free (where a paying participant is relieved of a prima facie obligation to pay for that game). In this case, the first spin was free for all new customers. Accordingly the value was excluded from the definition of ‘gaming payment’ and was not within the scope of RGD. By way of the first spin, customers could win subsequent free spins on other games. With respect to these subsequent spins, there was a prima facie obligation to pay that was waived. This amount was included in the definition of ‘gaming payment’, and was subject to RGD. The FTT dismissed Jumpman Gaming’s appeal against HMRC’s assessment for RGD on the subsequent spins. (Contact: Brad Kyne)

Extended producer responsibility for packaging scheme

On 1 October 2025, the first payments were due under the extended producer responsibility (EPR) for packaging scheme. Under the scheme, producers must pay a fee for packaging supplied in or imported into the UK, either under a business’ own brand or another brand in various circumstances (such as an online marketplace). The fees differ depending on the type of packaging (i.e., plastic, glass, etc.). The money paid into the scheme will be paid out to local authorities to cover the costs of collecting, recycling, and disposing household packaging waste. The intention is to incentivise businesses to reduce and recycle packaging. Businesses within the scheme were required to report packaging data, and register with their respective environmental regulator, by April 2025, with fees calculated on the basis of the reported data. From 2026, these fees will be modulated with higher fees for ‘red’ materials (i.e., more difficult to recycle) and lower fees for ‘green’ materials (i.e., easier to recycle). Initial guidance has been published on the mechanisms of this modulation method with further statements anticipated before it is implemented. (Contact: Ellie Newey)

Vaping products duty – HMRC update

HMRC have issued a press release regarding the introduction of vaping products duty (VPD) and vaping duty stamps (VDS) on 1 October 2026. VPD will be a new excise duty applicable to vaping liquids sold or supplied in the UK. VDS must be attached to vaping products. Manufacturers and importers of vaping products must apply to HMRC for approval to continue operating once VPD and the VDS scheme come into effect. Registration for approval opens on 1 April 2026. HMRC are encouraging affected business “to prepare now to avoid disruption as approval may take up to 45 working days”. (Contact: Eleanor Caine)

CJEU VAT case calendar

On 9 October, the CJEU will deliver its judgment in Xyrality on the VAT treatment of (pre-2015) in-app purchases.