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HMRC internal manual

VAT Business/Non-Business Manual

VAT Business/Non-Business basics: UK law

Scope of VAT on taxable supplies

Section 4 Value Added Tax Act 1994 provides that:

(1)VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him.

Input Tax

Section 24, Value Added Tax Act 1994 provides that:

(1) Subject to the following provisions of this section, “input tax”, in relation to a taxable person, means the following tax, that is to say -

(a) VAT on the supply to him of any goods or services;

(b) VAT on the acquisition by him from another Member State of any goods; and

(c) VAT paid or payable by him on the importation of any goods from a place outside the Member States,

being (in each case) goods or services used or to be used for the purpose of any business carried on or to be carried on by him.

Section 94, VAT Act 1994

This section provides the legal basis for the treatment of particular activities as businesses for VAT purposes:

(1) In this Act “business” includes any trade, profession or vocation.

(2) Without prejudice to the generality of anything else in this Act, the following are deemed to be the carrying on of a business

(a)the provision by a club, association or organisation (for a subscription or other consideration) of the facilities or advantages available to its members; and

(b)the admission, for a consideration, of persons to any premises.

(4) Where a person, in the course or furtherance of a trade, profession or vocation, accepts any office, services supplied by him as the holder of that office are treated as supplied in the course or furtherance of the trade, profession or vocation.

(5) Anything done in connection with the termination of intended termination of a business is treated as being done in the course or furtherance of that business.

(6) The disposition of a business as a going concern, or of its assets or liabilities (whether or not in connection with its reorganisation or winding up), is a supply made in the course or furtherance of the business.