What basis does official valuation guidance state?
The Cabinet Office's Valuation of Contracts guidance says estimated contract value should be inclusive of VAT. Its discussion concerns valuation under the Procurement Act regime, with its own scope and methodology.
Tender Glossary is independent and is not affiliated with the Cabinet Office. This article does not set a procurement threshold, decide a tax liability or apply the same rule to every UK or Australian procurement. It is not legal or tax advice.
Sources: Cabinet Office: Cabinet Office: Valuation of Contracts guidance, checked 22 October 2026
Which values should the bid register distinguish?
Read the label and purpose before comparing two amounts. A procurement estimate may also cover a different scope from one bidder's line or package.
| Value | Evidence to retain | Comparison question |
|---|---|---|
| Procurement estimate | Notice and valuation basis | Which overall scope? |
| Net bid amount | Actual pricing schedule | Excludes which tax? |
| VAT entry | Required applicable treatment | Who has verified it? |
| Gross amount | Defined total and scope | Same comparison basis? |
| Options | Applicable valuation or pricing instructions | What is included? |
| Clarification | Authorised response reference | Was the ambiguity resolved? |
How can two amounts differ without a price change?
Illustrative example. Assume a fictional package has a net amount of 100 cost units and, solely for this example, a tax amount of 20 units. Its gross amount is 120. Comparing 100 net with 120 gross as if both were net creates a difference caused by the comparison basis.
The example does not prescribe a current VAT rate or determine whether any particular supply is taxable. Real bid entries follow the actual tender instructions and qualified tax and procurement review. Do not reverse-engineer the required tax treatment from a notice total.
What should be clarified before submission?
If the form, notice and narrative use inconsistent labels, retain each source and ask the authorised procurement contact the specific question permitted by the tender process. Keep the confirmed basis with the response and final schedule.
Correct arithmetic does not prove that the same contract scope, options or valuation method was used. Those are separate review inputs.
Common questions
What else should the bid team know?
Does the notice value automatically tell a bidder how to complete every field?
No. Follow the actual pricing instructions and clarify ambiguity.
Is the fictional tax amount a current VAT recommendation?
No. It only illustrates net and gross comparison bases.
Does this guide decide procurement thresholds or tax liability?
No. Obtain qualified advice on the actual facts and applicable regime.