VAT on composite supplies
Produced in partnership with Martin Shah and Gary Barnett of Simmons & Simmons LLP
VAT on composite supplies

The following Tax guidance note Produced in partnership with Martin Shah and Gary Barnett of Simmons & Simmons LLP provides comprehensive and up to date legal information covering:

  • VAT on composite supplies
  • Single composite supplies vs multiple supplies
  • What test is applied?
  • Nature of the single supply
  • Single supply at differing rates?
  • Supplies by separate persons
  • What factors should be taken into account in practice?

Brexit: As of exit day (31 January 2020) the UK is no longer an EU Member State. However, in accordance with the Withdrawal Agreement, the UK has entered an implementation period, during which it continues to be subject to EU law. For further guidance, see Practice Note: Brexit—UK tax consequences.

Single composite supplies vs multiple supplies

Where a supply comprises a number of different elements with varying VAT treatments, the question arises as to whether each element of the supply should be treated individually for VAT purposes (a multiple or mixed supply) or whether all of the elements of the supply should assume the same VAT treatment (a single or composite supply) and, if so, which treatment.

This question has consistently troubled the courts, HMRC and taxpayers, and has regularly been considered by both the domestic courts and the EU Court of Justice. This Practice Note considers the current state of the law and practice in this area.

Why the need to distinguish between single and multiple supplies?

In the UK, a transaction may, generally speaking, be:

  1. subject to VAT at the standard rate or reduced rate (for further details, see Practice Notes: When does VAT apply? and VAT—zero-rated and reduced rate supplies)

  2. exempt (for further details, see Practice Note: Exemptions from VAT)

  3. zero-rated (for further details, see Practice Note: VAT—zero-rated