V3.216 Services

The charge to tax

A person (P) carrying on a business is treated as making a supply of services in the course or furtherance of business if1:


    •     services have been supplied to P


    •     P puts those services to any private use, uses them for a purpose other than a purpose of the business, or makes them available to any person for use for a purpose other than a purpose of the business, and


      –     P was, or will become, entitled to input tax credit on all or part of the supply to P or


      –     in the case of a business transferred as a going concern2, the person from whom the business was originally transferred was entitled to recover input tax on those services3. This rule applies irrespective of whether the business is transferred more than once4

In the case of a business carried on by an individual, the individual is so treated as making a supply of services if the services supplied to him are used, or made available for use, by himself personally5.

Case law

A company contended that the provision of free telephone line rental and cable TV services to its employees was for the purpose of its business – it ensured that the employees kept up to date with the company's products and enabled them to demonstrate the company's services to their friends and neighbours. However, it was held that the company's underlying purpose was to make the services available for a non-business purpose,

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