Call Us Today! 01483 456363  xero-transparentrb1
This email address is being protected from spambots. You need JavaScript enabled to view it.

Businesses within the scope of VAT in the UK

Source: HM Revenue & Customs | | 18/11/2020

The VAT system is policed by HMRC who can and do levy penalties for breaches of the legislation.

There are four conditions that must be satisfied in order for an activity to be within the scope of UK VAT.

These conditions are that the activity:

  1. Is a supply of goods or services
  2. That the supply takes place in the UK
  3. Is made by a taxable person
  4. Is made in the course or furtherance of any business carried on or to be carried on by that person

The fourth point above is a condition that needs to be carefully considered when deciding whether an activity is within the scope of VAT. This concept of 'business' is one of the less well-known rules. However, this is an important condition that drives the decision should a business charge VAT on their sales, known as output VAT and on its ability to recover VAT, known as input tax.

The VAT concept of business is currently taken to be the same as the concept of 'economic activity' set out in European legislation. Therefore, if an activity falls within EU definition of economic activity it must be business in the UK. Both of these definitions are wide and, in some cases, have needed to be interpreted by the courts.



Contact Us

1 High Street
Guildford
Surrey
GU2 4HP
01483 456363

Tel: 01483 456363
This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

Newsletter

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login

 

Membership

ICAEW-White

Search News