VAT liability ― overview

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of the concept of VAT liability along with links to further practical guidance on the subject.

In-depth commentary on the legislation and case law associated with VAT liability is covered in:

•
De Voil Indirect Tax Service V4.1 ― VAT exemption
•
De Voil Indirect Tax Service V4.2 ― the zero rate of VAT
•
De Voil Indirect Tax Service V4.4 ― the reduced rate of VAT

Introduction to liability

Supplies of goods and services which are made by taxable persons in the course of their UK business activities can be subject to one of four VAT liability treatments:

•
standard-rated
•
reduced-rated
•
zero-rated
•
exempt

Standard, reduced and zero-rated supplies are often referred to collectively as ‘taxable supplies’. This distinguishes them from exempt supplies. The distinction between supplies that are taxable and supplies that are exempt is important because of its consequences for input tax recovery. VAT can generally be recovered on costs which are used to make taxable supplies. However, VAT cannot generally

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