Chapter 3 - Supply of services

25. Meaning of supply of services

Summary

This section defines the meaning of supply of services. For VAT purposes, a service is any commercial activity that is not a supply of goods. Services also include refraining from doing something and the granting or surrendering of a right.

(Also see the two-thirds rule in section 41: A transaction that appears to be a supply of services may be taxed as a supply of goods. This applies where the VAT-exclusive cost of the goods to the supplier exceeds two-thirds of the VAT-exclusive price charged to the customer.)

Details

(1) Subsection (1) defines services in very wide terms and provides, in effect, that any business activity that is not a supply of goods is a supply of services. It includes the performance or omission of any act or the toleration of a situation. The definition, therefore, includes such activities as the hiring and repairing of goods, the granting of patent or copyright licences, the promotion of competitions and entertainment including dances, the transport of goods, advertising and the discharge of an undertaking to refrain from any activity, or the toleration of any situation.

(2) The supply of ready-to-consume food or drink is treated as a supply of services and not a supply of goods where it is supplied-

• by a vending machine,
• on the premises of a catering or similar business, or
• on the premises or site of any other business where facilities are provided to consume the food or drink supplied. This includes on-site catering for films and the like, where there is no fixed premises.

Relevant Date: Finance Act 2019