V3.151 Value of supplies—introduction
The amount of VAT chargeable on a taxable supply1 made by a taxable person2 in the UK3 in the course or furtherance of a business carried on by him4 is determined by reference to the value of the supply5.
In broad terms, the value of a supply is determined by reference to the consideration for the supply6. The consideration is a tax inclusive amount7. The European Court of Justice has held8 that the provisions within Directive 2006/112/EC9 relating to the definition of the taxable amount leave member states no discretion as to the implementation. For supplies valued on special bases, see V3.166.
Since the consideration for a supply represents a tax-inclusive amount, it follows that the tax-inclusive amount comprises two elements:
• the value of the goods or services supplied, and
• the tax (if any) chargeable thereon
In Hostgilt10, where a contract for the sale of land indicated that the stated purchase price was exclusive of VAT, VAT was held to be payable in addition to that price. Had the contract been silent in respect of VAT, then the price would have been treated as VAT-inclusive. A similar decision was reached in Wynn Realisations Ltd (in administration) v Vogue Holdings Inc  STC 524, CA (Part V10), where the vendor was assessed by HMRC for VAT not originally expected as being due under the contract. See also Tulică v Agenţia Naţională de Administrare Fiscală – Direcţia Generală de Soluţionare a Contestaţiilor (Case C-249/12)