Valuation ― introduction

Produced by Tolley
Valuation ― introduction

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

  • Valuation ― introduction
  • Consideration wholly in money
  • Consideration not wholly in money
  • Valuing non-monetary consideration
  • Inclusive or exclusive of VAT
  • Barter transactions
  • Part exchange
  • Exceptions to the general rule

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

This guidance note provides an overview of the main valuation rules that apply in the UK to supplies of goods and services. This note should be read in conjunction with the Supply and consideration ― overview and Valuation ― special rules guidance notes. In the UK VAT will be charged on the following:

  1. the supply of goods and services in the UK

  2. the acquisition of goods in the UK from another EU member state

  3. the importation of goods from outside the EU

VATA 1994, s 1(1)

Consideration wholly in money

If a supply is for a consideration in ‘money’, its value for VAT purposes is such amount as, with the addition of the VAT chargeable, is equal to the consideration (VATA 1994, s 19(2)) unless one of the special valuation rules are applied to the supply (see the Valuation ― special rules guidance note). If the payment received is inclusive of VAT then the VAT element of the total amount of consideration received is determined by multiplying the consideration by the VAT fraction (currently 1/6 for supplies liable to VAT at 20%).

It should be noted that if other taxes are due on the supply made, the taxable amount must include any taxes, duties, levies and other charges due, with the exception of the VAT, as these are deemed to form part of the overall purchase price of the supply (2006/112/EC, Article 78(a)).

It should be noted that unless one of the following provisions applies, the supplier can charge whatever they decide for

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