Commentary

V7.336 Reduced-rated supplies subject to 5% VAT

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.336 Reduced-rated supplies subject to 5% VAT

Part V7 Tax planning | Commentary

V7.336 Reduced-rated supplies subject to 5% VAT

A development in the VAT world over the last ten years has been the extended use of the reduced rate of VAT.

The attraction of the 5% VAT rate is that it ensures the Treasury collects some tax on relevant supplies (as opposed to the complete loss of tax evident with zero-rating) – but obviously produces a healthy saving for the taxpayer compared to 17.5%.

A list of items subject to 5% VAT is contained in VATA 1994, Sch 7A (Groups 1–13) – the groups are shown below, along with the relevant HMRC Notices that give more detail on each category:

Group 1Supplies of domestic fuel or power (Notice 701/19/16)
Group

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