This guidance note provides an overview of when supplies can be treated as a single composite supply or a multiple supply for VAT purposes, and it should be read in conjunction with the Multiple supplies ― output tax apportionment and Single or multiple supplies ― other considerations guidance notes.
See De Voil Indirect Tax Service V3.105 and V3.106 for more detailed commentary.
Background
The underlying principle of VAT is that each supply of goods and / or services should be regarded as distinct and independent and that each supply is liable to VAT at the applicable VAT rate. For example, where a person goes into a supermarket and buys a number of different items in a single transaction; each item is regarded as a separate supply with its own VAT liability. However, if a supply contains a number of components that are supplied together to form a single supply, then this supply should not be artificially split into separate supplies and should be treated as a single supply liable to VAT at one rate.
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