BIM31501 - VAT: introduction

VAT was introduced by the FA72 and came into effect on 1 April 1973. The latest consolidated Act containing the legislation relating to VAT is the Value Added Tax Act 1994.

A general guide to VAT is contained in the VAT guide Notice 700, which is available on the HMRC Internet site.

Questions concerning specific difficulties should be referred to CT&VAT (Technical) in the usual way.

In general, VAT is imposed on the supply of goods and services in the UK by way of business. The definition of business includes a trade, profession or vocation but goes wider than this and includes the activities of clubs and recreational bodies and some of the activities of charities and non-profit-making bodies. It excludes an employee (except where the remuneration is chargeable to VAT under Section 94 (4), VATA 1994). In the following instructions, reference to a trade should be read as applying equally to professions and vocations.

As regards:

• Subcontractors, see CIS1200 onwards.
• Case VI, see BIM80125.
• Management expenses, see CTM08580.
• Charges on income, see IM3900 onwards.
• Employment income, see EIM15500 onwards.