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
imgtext

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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