Commentary

V3.125 Supplies made in the course or furtherance of business

Part V3 Supplies, acquisitions and imports

V3.125 Supplies made in the course or furtherance of business

V3.125 Supplies made in the course or furtherance of business

VAT is chargeable on taxable supplies1 only where they are made in the course or furtherance of business2. The nature of business carried on or deemed to be carried on is described in Division V2.2.

Prior to 1 January 1978 the term 'in the course of a business' was used in the legislation, and in considering the meaning of this phrase one tribunal chairman said3:

'It seems to us that we must do our best with the phrase in the context where we find it, and we see no reason to give it either a narrow construction or a wide one. On that basis we think that for a supply to be made in the course of a business, the making of it must be part and parcel of the carrying on of that business. We do not really dissent from [Counsel for HMRC's] test that it must be a 'normal incident of the daily activities' of the business.'

The term 'in the course or furtherance of any business' was substituted with effect from 1 January 1978. The words 'or furtherance' do not extend the ambit of VAT to supplies made by a taxable person who is not acting as such and who is not carrying on an economic activity within the meaning of EU legislation4. The words do, however, ensure that all business activities are brought within the scope of VAT (eg fringe activities carried on separately from a main business and

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