Issue link: https://htpgraphics.uberflip.com/i/392122
41 As you will be supplying services then the amount that you charge for your work is potentially subject to VAT. You can find a basic "Introduction to VAT" on HM Revenue & Customs' website (www.hmrc.gov.uk). The supply of services is a taxable supply and if the value of your taxable supplies is over a specific limit then you will almost certainly have to register for VAT. You can check the current limits on the HM Revenue & Customs' website. The penalties and interest which are chargeable if you fail to pay your VAT correctly are substantial. So it is important that you get this right. Again you should probably be able to get some initial help from your Contract Services Office, IP commercialisation organisation or equivalent. If you undertake your consultancy work through your institution, then any fees which your institution receives and pays to you in respect of the consultancy will be subject to PAYE and National Insurance Contributions in the usual way. If, however, you undertake your consultancy work as a private consultancy, then the tax regime will depend upon whether you undertake the work as an individual (sole trader) or through an incorporated company. If the former, then the consultancy income is likely to be subject to Schedule D income tax. In the case of the latter the fees will be subject to corporation tax: remember that there will be further charges to tax as and when money is paid out to you from the consultancy company. Your client may well require you to indemnify it against any tax which is payable by you. It is important to get proper book-keeping/accountancy support to make sure that you are complying with all your obligations in relation to tax. Specialised Forms of Consulting As mentioned in Section 1, there are two types of individual consulting assignments – expert witness and due diligence – which command high fees because they are very specialised but at the same time they have particular rules to observe and risks associated with them. Let's look at these in more detail here: Managing Risk Section 6