Section 4 of VAT Act 1994 which is aptly entitled 'scope of VAT on taxable supplies' sets out the various conditions that must be satisfied for United Kingdom VAT to arise –
'VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him.'
Therefore, it is self-evident that, generally, for VAT to arise, five key elements need to be present:
1) There must be a supply;
2) The supply must be of goods or services;
3) The supply must take place in the United Kingdom;
4) The supply must be a taxable supply;
5) The supply must be made by a taxable person in the course or furtherance of business.
This issue of VAT Digest considers the meaning of the VAT concept of 'supply', its classification into supplies of goods and services (and, complicatedly enough, into supplies which are neither, as well as a new emerging court imposed fictional concept of a 'nonsupply') and examines the rules which dictate where supplies of goods and/or services are treated as taking place for the purposes of VAT.