diff --git a/src/Taxes.md b/src/Taxes.md
index c4fecc2..718e579 100644
--- a/src/Taxes.md
+++ b/src/Taxes.md
@@ -1,6 +1,11 @@
 % Taxes
 
+## Income tax
+
 - [[Personal income and taxes]]
 - [How to use ledger(1) to track US income taxes](https://mumble.net/~campbell/2017/08/06/ledger/HOWTO-track-tax)
 - [Another Ledger user's perspective](https://groups.google.com/d/msg/beancount/QV4qgpFbtJ8/9fSgMw-XGC8J) 2015
 
+## Value-added tax
+
+- [[VAT]]
diff --git a/src/VAT.md b/src/VAT.md
new file mode 100644
index 0000000..1cc6a0e
--- /dev/null
+++ b/src/VAT.md
@@ -0,0 +1,64 @@
+VAT is a consumption tax applied at each stage of production and distribution where value is added.
+For businesses registered for VAT, maintaining accurate records is important for compliance and tracking tax liabilities. 
+
+### Recording a Purchase with VAT (Input VAT)
+
+When a business purchases goods or services from a VAT-registered supplier, it pays VAT (Input VAT) that can typically be reclaimed.  This reclaimed VAT is considered an asset.
+
+Example: Buying office supplies for £100 with 20% VAT.
+
+```hledger
+2025-01-01 * Purchase office supplies
+    expenses:office supplies                    £100
+    assets:vat:input                             £20
+    assets:cash                                -£120
+```
+
+### Recording a Sale with VAT (Output VAT)
+
+When a business sells goods or services, it collects VAT (Output VAT) from the customer and owes this amount to the tax authorities. Output VAT is considered a liability.
+
+Example: Selling goods for £500 with 20% VAT.
+
+```hledger
+2025-01-02 * Sale of goods
+    assets:cash                                 £600
+    income:sales                               -£500
+    liabilities:vat:output                     -£100
+```
+
+### Balancing VAT at the end of the Period
+
+At the end of a VAT period (e.g., monthly or quarterly), the business balances the Input VAT and Output VAT accounts to determine the net VAT payable or receivable.
+
+Example (VAT Payable): Output VAT is £100 and Input VAT is £20.
+
+```hledger
+2025-01-31 * VAT adjustment
+    ; consolidate smaller into larger
+    assets:vat:input                            -£20 = £0
+    liabilities:vat:output                       £20
+    ; convert to a payable or receivable
+    liabilities:vat:output                       £80 = £0
+    liabilities:vat:payable                     -£80
+```
+
+### Settling VAT
+
+When VAT is payable, the business pays the tax authorities.
+
+Example: Paying the above £80 VAT payable.
+
+```hledger
+2025-02-15 * VAT payment
+    liabilities:vat:payable                      £80 = £0
+    assets:bank                                 -£80
+```
+
+If VAT was receivable, the business would receive a refund from the tax authorities instead.
+
+```hledger
+2025-02-15 * VAT refund
+    assets:vat:receivable                       -£80 = £0
+    assets:bank                                  £80
+```