VAT Risk Areas HMRC Is Targeting in 2026

HMRC activity in January has confirmed that VAT remains a major compliance focus in 2026.

Updated guidance and professional commentary point to several recurring risk areas that SMEs should address early in the year.

Common issues include partial exemption calculations, incorrect zero-rating, and errors around international services. With Making Tax Digital data now giving HMRC greater visibility, inconsistencies are more easily flagged.

Another concern is VAT on digital and mixed supplies, where businesses unintentionally apply incorrect rates. This is particularly relevant for professional services, training providers and software-related businesses.

February presents an opportunity to conduct a VAT health check before errors compound. Early identification allows voluntary disclosure, which is generally treated more favourably by HMRC than issues discovered during inspection.

To learn which areas pose the biggest risk for your business, get in touch to arrange a VAT compliance review.