Value Added Tax

Supply and consideration ― is the supply for consideration?

Produced by Tolley
  • 20 Apr 2022 12:25

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

  • Supply and consideration ― is the supply for consideration?
  • What is the meaning of consideration?
  • What is the significance of a supply made for consideration?
  • When is there a direct link between a supply and consideration?
  • Practical points ― consideration

Supply and consideration ― is the supply for consideration?

This guidance note looks at when a supply is made for consideration for VAT purposes.

For an overview of supply and consideration generally, see the Supply and consideration ― overview guidance note.

For detailed commentary on the legislation and case law, see De Voil Indirect Tax Service V3.112.

What is the meaning of consideration?

Consideration is the ‘payment’ made for a supply of goods or services. It is usually a payment in money, but it can also be non-monetary consideration, such as supplies of goods or services that are provided in exchange (for example a barter transaction or part exchange).

HMRC cites the following definition in its guidance (even though the European law from which this is taken is no longer in force and the UK has left the EU):

‘“Consideration” means everything received in return for the supply of goods or the provision of services, including incidental expenses (packing, transport, insurance etc), that is to say not only the cash amounts charged but also, for example, the value of the goods received in exchange or, in the case of goods or services supplied by order of a public authority, the amount of the compensation received.’

VATSC05100

What is the significance of a supply made for consideration?

Consideration is a very

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