VATSC06313 | Consideration: Payments that are not Consideration: Grants: Relevant legislation

UK legislation defines what falls within the scope of VAT, and that definition is very broad. If a transaction does not fall within the definition it is outside the scope of VAT.

UK Legislation

The VAT Act 1994 states:

Section 1 (Value added tax)

(1) Value added tax shall be charged in accordance with the provisions of this Act

(a) on the supply of goods or services in the United Kingdom (including anything treated as such a supply.)

Section 4 (Scope of VAT on taxable supplies)

(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.

Section 5 (Meaning of supply)

(2) …

(a) “supply” in this Act includes all forms of supply; but not anything done otherwise than for a consideration;

(b) anything which is not a supply of goods but is done for a consideration (including if so done, the granting, assignment or surrender of any right) is a supply of services.