Although the UK left the EU on 31 January 2020, UK VAT provisions will generally continue to be construed in line with the EU provisions they were intended to give effect to and the historic EU case law on those concepts became “retained EU law” and continues to be relevant to the construction of those concepts.
HMRC have published Revenue & Customs Brief 10 (2022) ‘VAT – business and non-business activities’ confirming the updated approach to establishing whether an activity is a business activity or not, following the case of Wakefield College v HMRC [2018] EWCA Civ 952.
This sets out the following two-stage test for determining whether an activity is a business activity:
- the activity results in a supply of goods or services for consideration – requiring there to be a legal relationship with reciprocal performance between the supplier and recipient; and
- the supply is made for the purpose of obtaining income therefrom (i.e. remuneration) – in essence, there is an economic activity.
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