10-600 ‘Outside the scope’ items

Updated on June 7, 2022

Generally speaking, the following are not subject to VAT in the United Kingdom:

(a) transactions that don’t require you to make a purchase:

goods or services (e.g. money collected through an insurance claim for damage done to the premises after a burglary.)) The club did not supply the insurer with any goods or services

Imports into the United Kingdom

purchase from another EU member state (when the UK was still a part of the EU or was considered as such);

(2)supplies made by a non-taxable person, such as a company that is not required to register for VAT;

(3)supplies that are not made in the course or promotion of any business

VAT may be charged in the nation of supply for goods or services made outside the United Kingdom, such as tour operators who regularly deal in supplies where the supplier location is outside the United Kingdom.

There may be input tax credits available for business supplies made outside the UK if those supplies are taxed in the UK.

Supply prior to 1 April 1973, when VAT was introduced in the United Kingdom. For example, if a vocalist created a record in 1972 and gave the copyright to a publisher, all royalties earned after March 31, 1973 are not subject to VAT.

VATA 1994, s. 43(1)(a) states that supplies between members of a VAT group are “disregarded,” which means they are “beyond the scope of VAT.”

There are situations where the law states that “a transaction shall be treated as neither a supply of commodities nor a provision of services” (SI 1995/1268, art. 5), for example, some transfers of a going business.

A payment made under an indemnity contract is exempt from VAT because it does not represent payment for a service, such as money paid under a fire insurance policy.

When a vehicle is utilized in a business and afterwards sold for more than the vendor’s cost (which may be different from the cost when new), that portion of the consideration is beyond the scope of VATA. (VATA 1994, s. 50A as inserted by FA 1995 s. 24(1)). Employer charges for private use of an employee’s car are not subject to VAT if the employer:

(1) a tax blockage of 50% or 100% on the vehicle’s purchase price;

Second, the leasing business (18-570) is liable for the input tax blocking.

Certain self-supplies, such as the transfer of goods from a UK company to an overseas branch, are not subject to VAT. Some people’s self-supply are treated as both supplies to and by the person, and output tax must be accounted for.

VAT does not apply to supply of services that are made without consideration (as opposed to supplies that are viewed as or deemed to be supplies of services).

Supply of services is ‘outside the scope’ of UK VAT

If the following occurs, the supply of services is “beyond the scope” of UK VAT under the location of supply rules:

in another country (within or outside the EU) to a’relevant business person’

To any non-EU “relevant business person” who is not a member of the European Union.


Payments received and made that are ‘outside the scope’ of UK VAT

A complete alphabetical list can be found at:

Payouts that are not related to making a supply fall under (1)10-602 and (2)10-603 respectively.

Payouts made in the absence of obtaining a supply are dealt with under section 10-604.

Conditions for being ‘outside the scope’ of VAT

If certain conditions are met or specific circumstances arise, a transaction involving goods and services may be ‘beyond the scope’.

how they’re provided or purchased

(2) in the event that they are available;

(3) the manner in which they are marketed and sold;

how the product or service will be used

how well the evidence is collected and preserved;

in particular, whether or not the appropriate records are created and maintained;

(7)whether or not they receive any more products or services in exchange.

Official publication on ‘outside the scope’ transactions

Tax authorities in the United Kingdom have issued a list of VAT rates for a wide range of goods and services. Certain goods and services are exempt, reduced, zero-rated, or otherwise exempt from VAT under the following categories:

(1) sports, recreation, art, and antiquities; (2)

(2) health, welfare, and charitable organizations;

“energy,” “utilities,” “energy efficiency,” “heating”

(4) construction, land, and property; (5) building

the movement of goods and people; the use of automobiles;

(6) books, magazines, and newspapers, as well as the printing and mailing of those media;

outfitting yourself with the necessary protective gear, including, but not limited to:

Insurance, investment and financial services. (8)

Example: ‘Outside the scope’ income at a hotel

The following are examples of ‘beyond the scope’ money generated by a hotelier:

(1) a hotel charged £300 to a customer for damage to a room;

A customer was fined £90 for smoking in his hotel room, which was otherwise non-smoking.

A non-refundable deposit was paid by a consumer to reserve a room. The hotelier kept the deposit because the customer canceled the reservation.

Because the hotelier provided no goods or services to any of the customers, all of the revenue is “beyond the scope” of VAT.

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