Chapter 15 Definition of Supplies

Question 1

15.1 Introduction

Answer 1

A supply for VAT purposes generally arises where consideration is given in return for goods or services. Consideration is any form of payment. Once consideration is present and directly linked to a supply, we need to determine whether it is a taxable supply.

Question 2

15.2 Five conditions

Answer 2

There are five basic conditions to determine whether a supply merits a charge to VAT:
• The supply must amount to a supply of goods or services
• The supply must be made by a taxable person
• The supply must have been made in the UK
• The supply must have been made in the course or furtherance of business
• The supply must be a taxable supply by definition

Question 3

15.3 Taxable Supplies

Answer 3

We determine whether a supply is taxable, exempt or outside the scope of VAT. If taxable it will be at the 20% standard rate, 5% reduced rate or the zero rate. The reduced rate group are in Schedule 7A of VATA 1994

Question 4

15.5 Outside the scope of VAT

Answer 4

No VAT is due on:
• Salaries and wages
• Tips and gratuities given to staff
• Intra-group transactions if there is a VAT group registration in force
• The sale of a business as a going concern
• Supplies that take place wholly outside the UK