Finance: VAT


Value Added Tax (VAT) is a tax that is levied on the supply of goods and services in the course of business. ‘Business’ activities are concerned with making supplies to others (i) for any form of payment or other consideration, (ii) which have a degree of frequency and scale (iii) continue over a period of time and (iv) are within the scope of VAT which is currently levied at 3 different rates. Business transactions which attract the tax are called ‘taxable supplies’. A person making such supplies is a ‘taxable person’ and must normally be registered for VAT with HM Revenue & Customs (HMRC). ‘Non-business’ activities involve the supply of goods and services without charge or without competition in the private sector and these are outside the scope of VAT. Further guidance in respect of the non-business activities undertaken by local councils is given at paragraphs 45 to 47 below.

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