The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of the VAT treatment of transactions that involve trading commodities and commodity derivatives on terminal markets. Businesses that are involved in the provision of financial services should read the Exempt - finance - dealing in money, credit and debts, Exempt - finance - securities and Exempt - finance - derivatives guidance notes for more information.
The Treasury have granted wide powers to make provisions in respect of the VAT treatment of dealings on terminal markets and transactions by members of terminal markets. The main treatment is outlined below.
A commodity is a raw material such as coffee, grains, oil or metal and is traded on a commodity market. The commodity market can either be based in the country of the commodity’s origin or on a ‘terminal market’ which is a commodity market in a trading centre. As commodity prices can fluctuate widely, using commodity exchanges can assist producers and users of the commodity to hedge the price risk with outside speculators and investors.
The following are regarded as market members who are ordinarily engaged in dealing on the market and can therefore zero-rate certain transactions in commodities ordinarily dealt with on the market either as a principal or agent:
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