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HMRC internal manual

VAT Valuation Manual

Non-monetary consideration: value of non-monetary consideration before 1 August 1992 - open market value

Before 1 August 1992, the VAT Act 1983 Section 10(3) required a supply for non-monetary consideration to be valued by reference to open market value:

(3) If the supply is for a consideration not consisting or not wholly consisting of money, the value of the supply shall be taken to be its open market value.

Open market value was then defined in S10(5) of the VATA 1983:

(5) For the purposes of this Act the open market value of a supply of goods or services shall be taken to be the amount that would fall to be taken as its value under subsection (2) above if the supply were for such consideration in money as would be payable by a person standing in no such relationship with any person as would affect that consideration.

Section 10(3) was amended to the wording that can now be found in Section 19(3) of the VAT Act 1994 to clarify the position in UK law following the outcome of the Naturally Yours case. It should be noted that despite the previous use of the words open market value in the provision, the UK had been interpreting its law in a manner that had accorded with the European valuation principles.

Open market value is currently only to be used as a basis for valuation in limited circumstances as explained in VATVAL07000.