Rickie Lowery explains how HMRC’s approach to business and non-business activities for VAT purposes has recently changed.
For an entity to be entitled or required to register for VAT, it must be making taxable business supplies. Whether a supply is taxable can hopefully be established by reference to the VAT legislation (VATA 1994, Schs 7A, 8 and 9).
But even if a supply is found to be taxable, it must also be a business supply or it does not count for these purposes and VAT cannot be charged on it. More importantly, the VAT on expenses relating to a non-business supply is always irrecoverable.
The Lord Fisher case
Historically, Customs and Excise Commissioners v Lord Fisher [1981] 2 All ER 147 was often used to determine whether a supply was business or non-business. The outcome of this case was that factors such as the predominant concern of the
