VWASS2700 | Supplies of water: exception to the mixed use - the ‘predominant activity’ test

There is one exception to this general approach outlined in VWASS2600.

Where:

• a relevant industrial customer has two or more business activities; and

• one of those activities is non-industrial and exempt for UK VAT purposes; and

• that exempt activity is not the predominant activity; and

• the water supplied to the exempt business activity is separately identified and separately invoiced;

the water so invoiced may be treated as separately supplied and zero-rated.

This avoids putting a customer with separate non-industrial, VAT-exempt, activities and industrial activities at a disadvantage, compared to a customer who has only non-industrial exempt activities.