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HMRC internal manual

VAT Groups

Eligibility conditions for specified bodies: relevant business activities

What is a relevant business activity?

A relevant business activity is one where:

  • the business activity involves making supplies to other VAT group members;
  • the supplies carry VAT, or would carry VAT if the body corporate was not in the VAT group (i.e. they are not exempt, zero-rated or outside the scope of UK VAT);
  • the supplies are not merely incidental to the business activity (see );
  • the VAT group cannot recover VAT in full on the supplies, or would not be able to do so if the body corporate was not in the VAT group.

What are “incidental supplies”?

“Incidental” has its normal meaning. In general, intra-group supplies are incidental to a business activity, if they are occasional or minor supplies made in connection with the activity; they do not employ a substantial proportion of the resources devoted to the activity; and they are not sufficiently separate from the main business activity to constitute a business activity in their own right. An example is occasional intra-group supplies made by a retailer whose business is mainly selling to the public.