873. The scope and nature of VAT.

Value Added Tax (VAT)1 is a consumption tax charged on:

  1.  

    (1)     the commercial supply2 of goods or services in the United Kingdom3;

  2.  

    (2)     the acquisition in the United Kingdom of any goods from other member states of the European Union4; and

  3.  

    (3)     the importation of goods from places outside those member states5.

VAT is a tax on the final consumer, inasmuch as the final consumer is unable to recover or claim credit for the VAT included in the cost of supplies made to him. Its administration involves a credit mechanism system whereby a taxable person who is charged tax on