When does VAT apply?
When does VAT apply?

The following Tax practice note provides comprehensive and up to date legal information covering:

  • When does VAT apply?
  • A supply of goods or a supply of services
  • Supply
  • Consideration
  • Supply of goods or supply of services
  • Specifically excluded from being a supply
  • A taxable supply
  • Made in the UK
  • Taxable person
  • The course or furtherance of business
  • More...

A transaction must have five elements for UK VAT to be chargeable. It must:

  1. be a supply of goods or a supply of services

  2. be a taxable supply

  3. take place in the UK

  4. be made by a taxable person, and

  5. be made in the course or furtherance of any business carried on by that person

This Practice Note explains what each of those five elements means.

This Practice Note does not cover importation of goods or the circumstances where a UK person may be required to pay UK VAT on the supply of services from abroad, ie the reverse charge, for which see Practice Notes: VAT—the reverse charge on cross-border supplies and Importing goods from outside the EU.

This Practice Note includes references to EU Directives and case law; for information on the ongoing significance of EU Directives, and of judgments of the Court of Justice for the UK’s VAT rules, see Practice Note: Brexit and tax—the continued application of EU law.

A supply of goods or a supply of services

The first element has three parts. A transaction must:

  1. be a ‘supply’

  2. be categorised as either a ‘supply of goods’ or a ‘supply of services’, and

  3. not be specifically excluded from being a supply

Supply

The term ‘supply’:

  1. includes ‘all forms of supply’, but

  2. excludes anything done ‘otherwise than for a consideration’

HMRC provides some guidance:

'…a supply may be effected by

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