Value Added Tax Supplies of Goods A transfer of ownership of goods by agreement The sale of movable goods through an undisclosed agent The handing over of goods that are subject to a hire-purchase agreement The compulsory purchase of legal seizure of goods The transfer of goods within a business from a taxable activity to an exempt activity The appropriation of movable goods by a business person for private use

Value Added Tax Supplies of Goods – Deemed not to be supplies for VAT purposes: Advertising and industrial samples Goods supplied free of charge as replacement for original goods under warranty or guarantee Goods provided for security for a loan or debt Transfer of a business from one VAT registered person to another

Value Added Tax Supplies of Services Supply, in relation to a service, means the performance or omission of any act or tolerance of any situation other the supply of goods Any supply that is not a supply of goods

Value Added Tax Supplies of Services includes: The supply of food and drink fit for consumption with further preparation: By a vending machine By a hotel, canteen, restaurant The operation of a canteen by a business The supply of a service through an undisclosed agent Leasing and hiring goods

Value Added Tax Other supplies – Multiple and composite supplies When two or more supplies are made together it may be difficult to determine if it was a supply of a good or a service or both Difficulty assigning VAT rate to the supply

Value Added Tax Other supplies – Multiples supplies Two or more individual supplies made in conjunction with each other for a total consideration covering all of the elements of the supply, but each of the supplies are physically and economically dissociable from each other Each supply is an individual supply and taxable in its own right

Value Added Tax Other supplies – Multiples supplies Examples A restaurant meal with food and a soft drink or wine A hamper A car service along with new tyres A school book and exercise book for a single consideration with neither described as free

Value Added Tax Other supplies – Composite supplies A composite supply is a supply comprising two or more supplies in conjunction with each other where one supply is a principle supply and one is an ancillary supply The principal supply constitutes the predominant part of the supply The ancillary supply is not physically and economically dissociable from the principal supply

Value Added Tax Other supplies – Composite supplies The VAT rate applying to the principal supply will apply to the full composite supply Examples: A mobile phone with instruction manual Computer equipment with training Supply of coal in a bag

Value Added Tax The two thirds rule Applies to a contract for the supply of a service which involves the supply of a goods Contract must be for the supply of a service Example: contract from repair of washing machine that requires replacement of parts

Value Added Tax The two thirds rule Where the VAT exclusive cost of the goods in a contract from the supply of a service is less than two thirds of the total contract price, the rate of VAT applicable to the entire supply is the rate applicable to the supply of the service

Value Added Tax The two thirds rule Where the VAT exclusive cost of the goods in a contract from the supply of a service is two thirds or more of the total contract price, the rate of VAT applicable to the entire supply is the rate applicable to the supply of the goods