Supply and consideration 鈥� business and non-business activities
Value Added Tax
Guidance
This guidance note looks at how to determine whether an activity is business or non-business for VAT purposes.
For detailed commentary on the concept of a business for VAT purposes see De Voil Indirect Tax Service Division V2.2.
Business and non-business activities 鈥� introduction
One of the fundamental pillars of VAT is the concept of 鈥榖usiness鈥�. VAT is generally only chargeable on supplies of goods and services made 鈥榠n the course or furtherance of a business鈥�. A supply which is non-business is not subject to VAT and VAT incurred for non-business purposes is normally not recoverable.
Whether a person is undertaking business or non-business activities may also affect the VAT liability of some of the goods and services that it purchases. For example, construction services supplied to a charity in relation to a building which will be used for non-business purposes may be zero-rated. However, the same VAT relief is not available if the building is to be used for a business purpose.
HMRC鈥檚 policy for determining whether an activity
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