Exempt supply meaning

Sarabande v HMRC [2025] UKFTT 93 (TC) SB, a registered charity, holds a long lease of a central London property (the Building). Suture Inc Ltd (SIL), SB’s wholly owned subsidiary, is not VAT-registered. In 2018, SB opted for voluntary VAT registration and sought to recover £341,487.31 of VAT incurred on purchasing and refurbishing the Building. The project transformed what had been a warehouse-style area into art studios, gallery space and meeting rooms. SB’s objective was to create a venue to nurture an artists’ community, and it devised a structured support scheme for artists called the ‘Accelerator Programme’. Through this programme, artists were offered curated, subsidised space, comprising studio and exhibition areas together with a bundle of benefits, including use of professional equipment, guidance from sector specialists and hands-on assistance from as well as advice from industry experts and practical support offered by SB within the Building to participants in the scheme on a structured basis throughout...

Spectrum Community Healthcare CIC v HMRC [2024] UKUT 162 (TCC) The taxpayer, Spectrum, was contracted to provide a joined-up primary healthcare offering in prisons, mirroring the level of care available from the NHS in the wider community. Delivery took place under agreements with NHS England (NHSE). The key question was whether Spectrum supplied one exempt healthcare service, or instead made distinct supplies: exempt medical care and taxable prescription medicines and contraceptives. The FTT determined there was a single exempt supply of primary healthcare, or health and social care. Spectrum appealed to the UT on four grounds. Its first ground concerned the sequence in which the FTT addressed the issues. The tribunal examined the single versus multiple supply point first, then moved to the exemption question. This ground, closely connected to the second, was treated relatively briefly. The UT held it was orthodox to start with the single/multiple supply analysis. That approach aligned with established practice and framed the remaining issues...

In this issue: Companies and corporation tax Employment taxes International Real estate tax Anti-avoidance Taxes management and litigation Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Companies and corporation tax Supreme Court confirms Court of Appeal ruling: UK-Canada DTT conferred no UK taxing rights over the assigned payments (Royal Bank of Canada v HMRC) As outlined below, in Royal Bank of Canada [2025] UKSC 2, the Supreme Court rejected HMRC’s appeal and agreed with the Court of Appeal that Article 6 of the UK-Canada double tax treaty (DTT)—which grants taxing rights to the jurisdiction where the immovable property is located, in this instance an oil field—did not apply to the payments. The reason was that the right to exploit the UK oil field was held by Sulpetro (UK). The parent of Sulpetro (UK) (at first, Sulpetro and later BP after acquiring Sulpetro’s rights) only...

Why is the exemption for financial services important? VAT is a significant concern for firms in the financial sector, as supplying certain categories of financial services to customers belonging in the UK is exempt from UK VAT. This matters because: businesses will not levy VAT on services within the exemption; and such businesses cannot recover input VAT on supplies they receive while making an onward exempt supply The intermediary exemption for financial services Financial services supplies often involve other businesses serving as intermediaries between the parties requesting and delivering the services. Further parties may participate in a financial services transaction, for example by offering specialist advice or helping to ensure the deal proceeds. These services are VAT-exempt where the supplier: operates in an intermediary capacity provides intermediary services in relation to certain specified financial services transactions (whether or not the transaction ultimately concludes) Throughout this Practice Note, this is termed the ‘intermediary services...

Why is the exemption for financial services important? VAT is a significant issue for organisations in the financial sector, as the provision of certain financial services to customers located in the UK is exempt from UK VAT. This matters because: businesses do not levy VAT on services that fall within the exemption; and those businesses cannot recover input VAT on supplies they receive in the course of making an onward exempt supply The financial services exemption from VAT The UK VAT exemption for financial services stems from the relevant provisions of Council Directive 2006/112/EC (the VAT Directive). These provisions have been enacted into UK law through Schedule 9, Pt II, Group 5 to the Value Added Tax Act 1994 (VATA 1994), which lists the items that qualify for exemption. This Practice Note concentrates on the exemptions for services within the categories of ‘dealing with money’ (item 1 of Group 5) and ‘operating a bank account’ (item 8 of Group 5). The...

This Practice Note addresses VAT zero-rating available to developers who sell or let residential buildings, other than dwellings, that they have built. Such properties are classed as buildings for a ‘relevant residential purpose’ (RRP). For guidance on the zero-rating of dwellings, see Practice Note: Zero-rated sales and leases—person constructing a dwelling. Why does zero-rating matter? If zero-rating is not in point, the supply will ordinarily be exempt, meaning the developer is unable to reclaim VAT (ie input tax) on expenditure, including construction costs, professional fees and potentially the purchase of the site. For further detail, see Practice Note: When can a person recover VAT? There is also a zero-rating for constructing an RRP building, but only where the works are commissioned by the ultimate user, for example the operator of a care home. The zero-rating considered in this Practice Note is an alternative: a person constructing such a building for occupation by others will bear VAT on the build, but can recover it via a zero-rated sale...

This Agreement is entered into on [ date ] Parties [ name of the Company ] [ of [ address ] OR incorporated in England and Wales under Company registration number [ number ], whose registered office is at [ address ] ] (Purchaser) [ name of the Company ] [ of [ address ] OR incorporated in England and Wales under Company registration number [ number ], whose registered office is at [ address ] ] (Generator) Background The Generator owns and operates the Facility. The Purchaser intends to purchase, and the Generator intends to sell, the electricity to be produced by the Facility in line with the terms of this Agreement...

This Q&A presumes the beverages are not provided as part of catering. The Value Added Tax Act 1994 (VATA 1994) sets out the UK’s value added tax (VAT) framework. For broader guidance on VAT, consult Practice Notes: What is VAT?, When does VAT apply? and When can a person recover VAT? Zero-rated supplies A zero-rated supply still counts as a taxable supply, despite no VAT being levied on it. Accordingly, it differs from a VAT-exempt supply in VAT terms...