TOLLEY_ICON4_SIGNIN Contact us
Home/ Tolley Tax Guidance/ Value Added Tax / Types of supply
Value Added Tax

Valuation ― special rules

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:

  • Valuation ― special rules
  • Open market value rules
  • How do I work out an open market value?
  • Supplies between connected persons
  • Direct selling rules
  • Other special valuation rules
  • Private fuel (fuel scale charge)
  • Imports
  • Prompt payment discounts
  • Deemed supplies
    • More...

Valuation ― special rules

This guidance note considers some important special rules associated with valuing supplies for VAT purposes.

For an overview of valuation for VAT more broadly, see the Valuation ― overview guidance note and for the basic principles of valuation, see the Valuation ― basic principles guidance note.

In-depth commentary on the legislation and case law is provided in De Voil Indirect Tax Service V3.151.

Open market value rules

In certain circumstances, supplies are valued at their ‘open market value’ for VAT purposes rather than in accordance with the normal valuation principles set out in the Valuation ― basic principles guidance note.

Circumstances in which open market value rules may apply include:

  1. •

    supplies between certain connected persons

  2. •

    ‘direct selling’ arrangements

  3. •

    where a ‘self-supply’ occurs under rules for stock in trade cars (see the Input tax ― buying and leasing cars and other vehicles guidance note)

  4. •

    where fuel is supplied to employees / certain connected persons at below cost (see the Input tax - motoring expenses guidance note)

How do I work out an open market value?

Broadly, the VAT legislation takes an open market value to be the amount of monetary consideration that would be payable by a person ‘standing in no such relationship with any person as would affect that consideration’. In other words, it is important to look at what would have been paid if the parties to a transaction were not connected in any way.

Supplies between connected persons

HMRC has powers to direct that a business must account for VAT on

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

TAKE A FREE TRIAL

There's no margin for error. Think Tax.
Think Tolley.

TolleyGuidance gives you direct access to critical, comprehensive and up-to-date tax information and expertise you can rely on.

TAKE A FREE TRIAL

Popular Articles

Personal Tax

Utilising the capital gains tax annual exemption

Taxpayers may wish to consider basic tax planning arrangements in use the capital gains tax annual exemption. This type of tax planning is often reviewed at the end of the tax year.This guidance note first looks at the annual exemption in detail and then various tax planning strategies that might be

26 Apr 2022 10:42 | Produced by Tolley Read more Read more
Year-end tax planning
Corporation Tax

Corporate interest restriction ― calculating tax-interest expense amounts and tax-EBITDA

Why do we need to calculate these amounts?This guidance note sets out details of the initial calculations a group will need to undertake for the purposes of the corporate interest restriction (CIR) regime. For a general overview of the regime, see the Corporate interest restriction ― overview

05 Apr 2022 08:42 | Produced by Tolley Read more Read more
Personal Tax

Trading profits and losses and tax credits

Migration of tax credits to universal creditNew claims for tax credits are no longer possible as they have been replaced by the universal credit for all claimants. Existing claimants will continue to receive tax credits until they are migrated to the universal credit system. Migration will take

22 Mar 2022 09:46 | Produced by Tolley Read more Read more