Value Added Tax Act 1994

Section 5.

SCHEDULE 4 U.K. Matters to be treated as supply of goods or services

Modifications etc. (not altering text)

C1 Sch. 4 applied (with modifications) (1.4.2009) by Finance Act 2008 (c. 9), s. 113(2), Sch. 36 para. 34(4) (with Sch. 36 para. 38); S.I. 2009/404, art. 2

1 (1) Any transfer of the whole property in goods is a supply of goods; but, subject to sub-paragraph (2) below, the transfer— U.K.

(a) of any undivided share of the property, or

(b) of the possession of goods,

is a supply of services.

(2) If the possession of goods is transferred—

(a) under an agreement for the sale of the goods, or

(b) under agreements which expressly contemplate that the property also will pass at some time in the future (determined by, or ascertainable from, the agreements but in any case not later than when the goods are fully paid for),

it is then in either case a supply of the goods.

F1 2 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Sch. 4 para. 2 repealed (29.4.1996 with application to supplies made on or after 1.1.1996) by 1996 c. 8, ss. 29(4)(5), 205, Sch. 41 Pt. IV(2)

3 U.K. The supply of any form of power, heat, refrigeration [F2 or other cooling,] or ventilation is a supply of goods.

Textual Amendments

F2 Words in Sch. 4 para. 3 inserted (with effect in accordance with s. 20(3) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), s. 20(2)

4 U.K. The grant, assignment or surrender of a major interest in land is a supply of goods.

5 (1) Subject to sub-paragraph (2) below, where goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, that is a supply by him of goods. U.K.

(2) Sub-paragraph (1) above does not apply where the transfer or disposal is—

[F3 (a) a business gift the cost of which, together with the cost of any other business gifts made to the same person in the same year, was not more than £50.]

[F4 (b) the provision to a person, otherwise than for a consideration, of a sample of goods.]

[F5 (2ZA) In sub-paragraph (2) above—

• “business gift” means a gift of goods that is made in the course or furtherance of the business in question;

• “cost”, in relation to a gift of goods, means the cost to the donor of acquiring or, as the case may be, producing the goods;

• “the same year”, in relation to a gift, means any period of twelve months that includes the day on which the gift is made.]

[F6 (2A) For the purposes of determining the cost to the donor of acquiring or producing goods of which he has made a gift, where—

(a) the acquisition by the donor of the goods, or anything comprised in the goods, was by means of a transfer of a business, or a part of a business, as a going concern,

(b) the assets transferred by that transfer included those goods or that thing, and

(c) the transfer of those assets is one falling by virtue of an order under section 5(3) (or under an enactment re-enacted in section 5(3)) to be treated as neither a supply of goods nor a supply of services,

the donor and his predecessor or, as the case may be, all of his predecessors shall be treated as if they were the same person.]

F7 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Where by or under the directions of a person carrying on a business goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, that is a supply of services.

F8 (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F9 (4A) Sub-paragraph (4) does not apply (despite paragraph 9(1)) to—

(a) any interest in land,

(b) any building or part of a building,

(c) any civil engineering work or part of such a work,

(d) any goods incorporated or to be incorporated in a building or civil engineering work (whether by being installed as fixtures or fittings or otherwise),

(e) any ship, boat or other vessel, or

(f) any aircraft.]

(5) Neither sub-paragraph (1) nor [F10 sub-paragraph (4) above] shall require anything which a person carrying on a business does otherwise than for a consideration in relation to any goods to be treated as a supply except in a case where that person [F11 or any of his predecessors is a person who (disregarding this paragraph) has or will become] entitled—

[F12 (a) under sections 25 and 26, to credit for the whole or any part of the VAT on the supply, acquisition or importation of those goods or of anything comprised in them; or

(b) under a scheme embodied in regulations made under section 39, to a repayment of VAT on the supply or importation of those goods or of anything comprised in them.]

[F13 (5A) In relation to any goods or anything comprised in any goods, a person is the predecessor of another for the purposes of this paragraph if—

(a) that other person is a person to whom he has transferred assets of his business by a transfer of that business, or a part of it, as a going concern;

(b) those assets consisted of or included those goods or that thing; and

(c) the transfer of the assets is one falling by virtue of an order under section 5(3) (or under an enactment re-enacted in section 5(3)) to be treated as neither a supply of goods nor a supply of services;

and references in this paragraph to a person’s predecessors include references to the predecessors of his predecessors through any number of transfers.]

(6) Anything which is a supply of goods or services by virtue of sub-paragraph (1) or (4) above is to be treated as made in the course or furtherance of the business (if it would not otherwise be so treated); and in the case of a business carried on by an individual—

(a) sub-paragraph (1) above applies to any transfer or disposition of goods in favour of himself personally; and

(b) [F10 sub-paragraph (4) above] applies to goods used, or made available for use, by himself personally.

[F14 (7) The Treasury may by order substitute for the sum for the time being specified in sub-paragraph (2)(a) above such sum, not being less than £10, as they think fit.]

Textual Amendments

F3 Sch. 4 para. 5(2)(a) substituted (with application in accordance with s. 21(4) of the amending Act) by Finance Act 2003 (c. 14), s. 21(2)

F4 Sch. 4 para. 5(2)(b) substituted (19.7.2011) by Finance Act 2011 (c. 11), s. 74(2)

F5 Sch. 4 para. 5(2ZA) inserted (with application in accordance with s. 21(4) of the amending Act) by Finance Act 2003 (c. 14), s. 21(3)

F6 Sch. 4 para. 5(2A) inserted (31.7.1998 with effect as mentioned in s. 21(6) of the amending Act) by 1998 c. 36, s. 21(3)(6)

F7 Sch. 4 para. 5(3) omitted (19.7.2011) by virtue of Finance Act 2011 (c. 11), s. 74(3)

F8 Sch. 4 para. 5(4A) repealed (1.9.2007) by Finance Act 2007 (c. 11), s. 99(2)(6), Sch. 27 Pt. 6(1)

F9 Sch. 4 para. 5(4A) inserted (with application in accordance with Sch. 8 para. 3(3)-(5) of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 8 para. 3(1)(2) (with Sch. 8 para. 4)

F10 Words in Sch. 4 para. 5(5)(6)(b) substituted (retrospectively) by 1995 c. 4, s. 33(3)(a)

F11 Words in Sch. 4 para. 5(5) substituted (31.7.1998 with effect as mentioned in s. 21(6) of the amending Act) by 1998 c. 36, s. 21(4)(6)

F12 Sch. 4 para. 5(5)(a)(b) substituted for words in Sch. 4 para. 5(5) (28.7.2000 with effect as mentioned in s. 136(10) of the amending Act) by 2000 c. 17, s. 136(9)

F13 Sch. 4 para. 5A inserted (31.7.1998 with effect as mentioned in s. 21(6) of the amending Act) by 1998 c. 36, s. 21(5)(6)

F14 Sch. 4 para. 5(7) inserted (29.4.1996) by 1996 c. 8, s. 33(2)

Modifications etc. (not altering text)

C2 Sch. 4 para. 5(4) excluded by S.I. 1995/1268, art. 10A (as inserted (1.11.2007) by The Value Added Tax (Special Provisions) (Amendment) Order 2007 (S.I. 2007/2923), arts. 1, 3)

6 (1) Where, in a case not falling within paragraph 5(1) above, goods forming part of the assets of any business— U.K.

(a) are removed from any member State by or under the directions of the person carrying on the business; and

(b) are so removed in the course or furtherance of that business for the purpose of being taken to a place in a member State other than that from which they are removed,

then, whether or not the removal is or is connected with a transaction for a consideration, that is a supply of goods by that person.

(2) Sub-paragraph (1) above does not apply—

(a) to the removal of goods from any member State in the course of their removal from one part of that member State to another part of the same member State; or

(b) to goods which have been removed from a place outside the member States for entry into the territory of the [F15 European Union] and are removed from a member State before the time when any [F16 EU] customs debt in respect of any [F16 EU] customs duty on their entry into that territory would be incurred.

[F17 (3) Sub-paragraph (1) above is subject to paragraph 2 of Schedule 4B (call-off stock arrangements).]

Textual Amendments

F15 Words in Act substituted (22.4.2011) by The Treaty of Lisbon (Changes in Terminology) Order 2011 (S.I. 2011/1043), arts. 2, 3, 4 (with arts. 3(2)(3), 4(2), 6(4)(5))

F16 Word in Act substituted (22.4.2011) by The Treaty of Lisbon (Changes in Terminology) Order 2011 (S.I. 2011/1043), arts. 2, 3, 6 (with arts. 3(2)(3), 4(2), 6(4)(5))

F17 Sch. 4 para. 6(3) inserted (22.7.2020) by Finance Act 2020 (c. 14), s. 80(4)

Modifications etc. (not altering text)

C3 Sch. 4 para. 6(1) excluded (1.1.2005 for specified purposes) by The Value Added Tax (Removal of Gas and Electricity) Order 2004 (S.I. 2004/3150), arts. 1, 2

C4 Sch. 4 para. 6(1) excluded (with effect in accordance with art. 1(2) of the amending S.I.) by The Value Added Tax (Removal of Gas, Electricity, Heat and Cooling) Order 2010 (S.I. 2010/2925), arts. 1(2), 3 (as amended by S.I. 2020/1545, reg. 101)

7 U.K. Where in the case of a business carried on by a taxable person goods forming part of the assets of the business are, under any power exercisable by another person, sold by the other in or towards satisfaction of a debt owed by the taxable person, they shall be deemed to be supplied by the taxable person in the course or furtherance of his business.

8 (1) Where a person ceases to be a taxable person, any goods then forming part of the assets of a business carried on by him shall be deemed to be supplied by him in the course or furtherance of his business immediately before he ceases to be a taxable person, unless— U.K.

(a) the business is transferred as a going concern to another taxable person; or

(b) the business is carried on by another person who, under regulations made under section 46(4), is treated as a taxable person; or

(c) the VAT on the deemed supply would not be more than [F18 £1,000].

(2) This paragraph does not apply to any goods in the case of which the taxable person can show to the satisfaction of the Commissioners—

(a) that no credit for input tax has been allowed to him in respect of the supply of the goods, their acquisition from another member State or their importation from a place outside the member States;

(b) that the goods did not become his as part of the assets of a business [F19 , or part of a business,] which was transferred to him as a going concern by another taxable person; and

(c) that he has not obtained relief in respect of the goods under section 4 of the M1 Finance Act 1973.

(3) This paragraph does not apply where a person ceases to be a taxable person in consequence of having been certified under section 54.

(4) The Treasury may by order increase or further increase the sum specified in sub-paragraph (1)(c) above.

Textual Amendments

F18 Words in Sch. 4 para. 8(1)(c) substituted (1.4.2000) by S.I. 2000/266, art. 2

F19 Words in Sch. 4 para. 8(2)(b) inserted (with effect in accordance with s. 100(10) of the amending Act) by Finance Act 2007 (c. 11), s. 100(9)

Marginal Citations

M1 1973 c. 51.

9 (1) Subject to sub-paragraphs (2) and (3) below, paragraphs 5 to 8 above have effect in relation to land forming part of the assets of, or held or used for the purposes of, a business as if it were goods forming part of the assets of, or held or used for the purposes of, a business. U.K.

(2) In the application of those paragraphs by virtue of sub-paragraph (1) above, references to transfer, disposition or sale shall have effect as references to the grant or assignment of any interest in, right over or licence to occupy the land concerned.

(3) Except in relation to—

(a) the grant or assignment of a major interest; or

(b) a grant or assignment otherwise than for a consideration,

in the application of paragraph 5(1) above by virtue of sub-paragraph (1) above the reference to a supply of goods shall have effect as a reference to a supply of services.

[F20 (4) In this paragraph “grant” includes surrender.]

Textual Amendments

F20 Sch. 4 para. 9(4) inserted (with effect in accordance with s. 99(7) of the amending Act) by Finance Act 2007 (c. 11), s. 99(3)