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HMRC internal manual

VAT Valuation Manual

Apportionment of monetary consideration: is there a single consideration: general

Apportionment can only be applied to a single consideration that is given in return for more than one supply. If each supply has its own consideration, then there is no scope for apportionment. This may appear to be a statement of the obvious but in practice it is not always simple to distinguish between:

  • a payment that is a single consideration; and
  • a single payment that is made up of several considerations.

The distinction is important because if the considerations are genuinely separate there is no power under the VAT Act 1994 to “redistribute” the value between them.

Any claims that you receive from traders alleging the existence of separate considerations should be examined carefully as this area is fertile ground for the manipulation of the values of the supplies.

If a trader can establish that the considerations are separate then he is entitled to set each charge at any level he wishes - whether or not those charges are “fair”.

However, if there is only a single consideration then the VAT Act 1994, Section 19(4) requires that each supply is made only for that part of the consideration which is “properly attributable” to it. You could therefore encounter a trader who attempts to present a single consideration as a “simultaneous bunch” of separate considerations in an attempt to circumvent this requirement.

There are two Tribunal decisions that are relevant to this area and which may be referred to by traders or their representatives.