The Institute of Indirect Taxation is concerned with a number of taxes, grouped together under the heading "indirect taxes" to distinguish them from so-called "direct taxes" such as income tax, corporation tax and capital gains tax.

Value added tax

VAT is a tax on consumption so is effectively paid by the end user – which is individuals and those businesses that cannot, for whatever reason, recover the VAT from HMRC.

Goods and services are subject to VAT and the standard rate is 20% with reduced rates of zero (e.g. books and newspapers, food, new houses) and reduced rate 5% (e.g. certain construction services, small supplies of power, etc).

VAT is chargeable by VAT registered businesses at each stage of the supply chain – but, subject to conditions each VAT registered business that makes taxable supplies will be entitled to recover the VAT charged – so it is not a cascade tax – it is simply collected in stages.

Certain supplies are exempt from VAT e.g. health services, certain financial services, insurance etc and businesses supplying exempt services are not entitled to recover any VAT on related costs.

Although simple in concept the law is complex so there are many difficult areas such as property, cross border transactions, and those businesses that make both taxable and exempt supplies.

Customs duty

Customs duty is charged on importation of goods into the UK and other EU member states from non-EU countries. Intra-EU movements are out of scope. There is a detailed list of duty rates, known as the Tariff. Complex areas include deciding where various items fall within the Tariff, establishing the dutiable value and the application of various reliefs from duty. As EU and UK law develops, particularly in regard to the terrorist threat to international supply chains, this area of indirect taxation is receiving greater official attention than has been the case hitherto.

Excise duties

This is generally a tax on production rather than consumption, for alcohol, tobacco and hydrocarbon oils. Stricter controls have been introduced to control the storage and transportation of excise goods whilst they remain in duty suspension. An exception is general betting duty – a duty charged on off course bookmakers, tote operators etc.

Air passenger duty

APD is charged on the transport of passengers in aircraft departing from the UK. There are four destination bands:

Band A (0 – 2,000 miles)
Band B (2,001 – 4,000 miles)
Band C (4,001 – 6,000 miles)
Band D (over 6000 miles)

There are two possible rates of duty – a reduced rate of £12, £60, £75 and £85 for each of the above bands at the lowest class of travel, and £24, £120, £150 and £170 for each band at any class of travel other than the lowest.

In the March 2008 Budget it was announced that legislation would be introduced in the Finance Bill 2008 to enable HMRC to proceed with the development of a new duty on aviation before its introduction in November 2009, when it would have replaced air passenger duty. However, the Government decided to replace the two distance band regime with the above four distance bands rather than to proceed with a per plane tax.

Landfill tax

Landfill tax is a tax on the disposal of waste by way of landfill. Its aim is to encourage recycling or more environmentally friendly methods of waste disposal. Following the 2011 Budget, the standard rate of landfill tax has been increased to £56 per tonne with effect from 1 April 2011. The lower rate of £2.50 per tonne effective from 1 April 2008 remains unchanged.

Climate change levy

CCL is a single-stage sales tax on the supply to businesses and the public sector of some forms of energy, which are described as "taxable commodities". It is an environmental tax, which aims to encourage the more efficient use of energy in the non-domestic sector. It distinguishes between different forms of energy by taxing some energy products and not others. "Good" forms of energy are untaxed. In this way, CCL encourages people to switch to more environmentally friendly forms of energy. It also treats electricity (a single product) differently depending on how it was produced.

Aggregates levy

Aggregates levy is a single tax on the commercial exploitation in the UK of rock, sand, and gravel (and whatever occurs, or is mixed, with it). With effect from 1 April 2011 the rate of aggregates levy is £2.00 per tonne and will be increased to £2.10 per tonne with effect from 1 April 2012.

Business rates

Business rates are payable on the occupation of non-domestic property. They are collected by local authorities but the rate poundage is set by the Secretary of State for the Environment. Business rates are paid over to central government and are not included in local authority budgets, although the Government makes a compensatory refund, known as the revenue support grant, from the funding received.

Stamp taxes

Stamp duty, stamp duty reserve tax and stamp duty land tax are the three stamp taxes. The first is chargeable on documents, the second on share dealings where there is no document and the third on land transactions. Stamp duty land tax replaced stamp duty on land transactions with effect from 1 December 2003.