Liability ― water and sewage

Copyright © 2026 LexisNexis
Produced by a Tolley Value Added Tax expert
Value Added Tax
Guidance

Liability ― water and sewage

Copyright © 2026 LexisNexis
Produced by a Tolley Value Added Tax expert
Value Added Tax
Guidance
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This guidance note looks at the liability of supplies connected with water and sewage.

For an overview of VAT liability more broadly, see the Liability ― overview guidance note.

In-depth commentary on the legislation related to supplies of water and sewerage services is contained in De Voil Indirect Tax Service V4.271.

Water, sewage and connected services ― the basics

Liability of supplies of water

When considering the liability of supplies of water it is helpful to make a distinction between:

  1. •

    water supplied for industrial activities

  2. •

    water supplied for non-industrial activities

Water for industrial activities

Water which is supplied for what the VAT legislation calls a ‘relevant industrial activity’ will be standard-rated. The supplier is responsible for determining who is using the water and the correct VAT treatment of the supply made.

A relevant industrial activity is one of the activities described in Divisions 1–5 of the 1980 edition of the Standard Industrial Classification. The five divisions are:

  1. •

    energy and water supply industries

  2. •

    extraction of minerals and ores other than fuels;

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  • 29 Jul 2025 10:00

Home/ Tolley Tax Guidance/ Value Added Tax / Determining VAT liability

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