Taxable supply meaning

The Prudential Assurance Company Ltd v HMRC [2024] EWCA Civ 300 The Prudential Assurance Company Ltd (Prudential) acted as the representative member of its VAT group. Another company in the group, Silverfleet Capital Ltd (SCL), executed an investment management services contract to provide services to Prudential. Under that contract, SCL was also eligible for a management fee and deferred performance fees once a specified hurdle rate was achieved. Under section 43 of the Value Added Tax Act 1994 (VATA 1994), no VAT was payable on the management fee because they were in the same VAT group. In 2007, SCL exited the VAT group. In 2014 and 2015, the triggers for paying the further deferred performance fee were satisfied and SCL invoiced Prudential for over £9m in total. The question before the Court of Appeal was whether those additional performance fees ultimately constituted consideration for a supply made while both companies were members of the same VAT group or, alternatively, whether the services amounted to a continuous supply of services...

In this issue: Employment taxes VAT International Individuals and income tax Taxes management and litigation Daily and weekly news alerts New and updated content Dates for your diary Trackers Useful information Employment taxes Appeal court rules that loans advanced through a remuneration trust were chargeable as disguised remuneration and that the linked costs were non-deductible (Marlborough DP Limited v HMRC). In Marlborough DP Ltd, the Court of Appeal dismissed the taxpayer’s case and upheld the Upper Tribunal (UT). It found that amounts lent to a director under a remuneration trust fell within the disguised remuneration regime in Part 7A of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003), as they were made in connection with employment. The Court further concluded that the associated payments were not allowable for corporation tax, since they were not incurred wholly and exclusively for the purposes of the company’s trade. See News Analysis: Court of Appeal...

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...

ARCHIVED: This Practice Note has been archived and is not maintained This tracker tool outlines and condenses significant new and forthcoming laws and consultations across England and Wales relating to environmental taxes, reliefs and incentives. HM Treasury defines an environmental tax as one that satisfies these three principles: it is expressly linked to the government's environmental aims the primary purpose is to encourage environmentally positive behaviour change its structure reflects environmental objectives—for example, the more polluting the activity, the higher the tax imposed The following environmental taxes apply in England and Wales: landfill tax: payable on waste disposals at licensed landfill sites and on certain prescribed landfill activities climate change levy (CCL): a mandatory charge on UK business energy use, applied at the time of supply as taxable supplies. The climate change agreement (CCA) scheme allows eligible facilities a reduced rate (discount) on the CCL aggregates levy: an environmental tax administered by HMRC on the...

THIS PRACTICE NOTE RELATES TO OCCUPATIONAL PENSION SCHEMES This Practice Note cites decisions of the Court of Justice of the European Union (CJEU). For direction on whether EU judgments bind courts in the UK, see Practice Note: Assimilated law—Assimilated case law. VAT basics The United Kingdom’s Value Added Tax (VAT) regime, originating in European law, is principally set out in the Value Added Tax Act 1994. VAT is a levy on consumer spending. A VAT-registered business must account to HMRC for VAT on the value of supplies of goods and services it makes, and therefore adds VAT to the amount it charges its customers for those supplies. That business may obtain credit for VAT it incurs on goods and services it uses. The VAT added to its prices is termed ‘output tax’, while VAT recoverable on its purchases is termed ‘input tax’. VAT only applies to ‘taxable supplies’. Only ‘taxable supplies’ fall within the scope of VAT in the UK itself. Exempt areas include insurance and the...

In the UK, VAT applies to supplies of goods and services made by a taxable person in the course of business activity, save where those supplies are exempt (or zero‑rated—see Practice Note: VAT—zero‑rated and reduced rate supplies). A VAT exemption carries three principal effects, namely: the supplier does not need to charge VAT on the transaction the value of the supply is ignored when determining whether the supplier must register for VAT purposes input tax attributable to exempt supplies cannot be reclaimed—so for a business making exempt supplies, that input VAT represents an absolute (and not merely a timing) cost For a fuller explanation of the rules on input tax recovery, see Practice Note: When can a person recover VAT? The Value Added Tax Act 1994 (VATA 1994) sets out 16 groups of exempt supplies. Those groups were derived from EU Council Directive 2006/112/EC (the VAT Directive) or its predecessors, yet material differences existed between the UK legislation and the Directive. Where...

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...