Single or multiple supplies ― other considerations

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Single or multiple supplies ― other considerations
  • Can a single supply have more than one VAT liability applied?
  • What is the linked goods concession?
  • What happens if there is a two-part tariff?
  • What is the supply splitting anti-avoidance legislation?
  • What is ‘artificial’?
  • Practical points

Single or multiple supplies ― other considerations

This guidance note looks at the other issues that need to be considered when determining whether a single or multiple supply is being made. This guidance note should be read in conjunction with the Single or multiple supplies ― overview, Single or multiple supplies ― indicators that it is a single or multiple supply and Multiple supplies ― output tax apportionment guidance notes.

Can a single supply have more than one VAT liability applied?

Normally, if a single supply is being made then it can only have one VAT liability applied to it; however, there are limited exceptions to this rule where UK legislation has restricted the scope of the zero rate, reduced rate or exemption.

The CJEU judgment in Talacre Beach Caravan Sales Ltd provides an example of a situation where this has occurred.

This case confirmed HMRC’s view that a single composite zero-rated supply that included a component which was specifically blocked by the legislation from being zero-rated must be apportioned between the zero-rated and standard-rated items. It is not possible to extend the scope of the zero rate in this situation in order for the whole supply to be zero-rated as this was not what Parliament intended when the legislation was introduced.

See the CJEU decision reached in Commission v France, where the Court ruled it was permissible for the French tax authorities to exempt part of the supply made by French undertakers, because there was a specific aspect of the French legislation that allowed this. Therefore, providing the concept of fiscal neutrality was not breached, it was not artificial to carve out one element of a single supply in order to apply a different VAT liability where this is required under the relevant legislation.

When considering whether a component should be carved out, it is necessary to consider the principles laid down in Levob and Card Protection Plan (see the Single or multiple supplies ― overview guidance note)

Popular documents