Value Added Tax Act 1994, section 2

Rate of VAT

Part I The charge to tax

(1)F7Subject to the following provisions [F6and to the provisions of section 29AF6] of this section ..., VAT shall be charged at the rate of [F820 per centF8] and shall be charged—

(a)on the supply of goods or services, by reference to the value of the supply as determined under this Act; and

F9(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)F10on the importation of goods ..., by reference to the value of the goods as determined under this Act.

F11(1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11(1B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F12(1C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)The Treasury may by order increase or decrease the rate of VAT for the time being in force [F13under this sectionF13] by such percentage thereof not exceeding 25 per cent. as may be specified in the order, but any such order [F14that has not previously expired or been revokedF14] shall cease to be in force at the expiration of a period of one year from the date on which it takes effect, unless continued in force by a further order under this subsection.

(3)In relation to an order made under subsection (2) above to continue, vary or replace a previous order, the reference in that subsection to the rate for the time being in force [F13under this sectionF13] is a reference to the rate which would be in force if no order under that subsection had been made.

Definitions used in section 2 2

VAT

“VAT” means value added tax charged in accordance with this Act;

Defined in s.96(1) · see it in the full Act

(2) Subsection (1) shall have effect in a case falling within paragraph (b) of that subsection where the assessment was made on or before 10th March 1992 with the substitution of “20 per cent.” for “15 per cent.” .

Defined in Sch.13 para.15(2) · see it in the full Act

Cases considering section 2 11

Total UK Ltd v Revenue & Customs

[2006] EWHC 3422 (Ch) · 3 November 2006

The court treated a VAT liability on Total’s voucher transfer as dependent on whether the transfer was a supply. It concluded that the transfer was not made for a consideration and therefore did not itself create an output-tax liability. (see paras [16]; [21])

Kieran Mullin Ltd v The Commissioners of Customs and Excise

[2003] EWHC 4 (Ch) · 15 January 2003

Applies the statutory VAT rate in explaining the different VAT consequences of the two contractual structures. The rate did not determine which person supplied the hairdressing service (see paras [6], [9]-[10]). Applies the rule that VAT is normally charged on the consideration for the supply. Because the stylists supplied the hairdressing services, the customers’ payments were not consideration for supplies made by the company (see paras [6], [9]-[10], [42]).

National Transport Authority v Mauritius Secondary Industry Limited (Mauritius)

[2010] UKPC 31 · 13 December 2010

The provision is identified as the corresponding United Kingdom rate provision and is used for comparison with the Mauritius charging scheme. (see para [6])

What each judgment says about section 2 is in the case-law panel in the full Act.

Amendments and notes

10 notes from legislation.gov.uk

Amendments

  1. F7Words in s. 2(1) omitted (1.5.1995 with application as mentioned in s. 21(6) of the amending Act) by virtue of 1995 c. 4, s. 21(2)
  2. F6Words in s. 2(1) inserted (11.5.2001 with effect as mentioned in s. 99(7)(a) of the amending Act) by 2001 c. 9, s. 99(2)
  3. F8Words in s. 2(1) substituted (27.7.2010) by Finance (No. 2) Act 2010 (c. 31), s. 3(1)
  4. F9S. 2(1)(b) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 3(a) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  5. F10Words in s. 2(1)(c) omitted (31.12.2020) by virtue of Taxation (Cross-border Trade) Act 2018 (c. 22), s. 57(3), Sch. 8 para. 3(b) (with Sch. 8 para. 99) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7) this amendment is subject to savings and/or transitional provisions, see the commentary.
  6. F11S. 2(1A)(1B) repealed (11.5.2001 with effect as mentioned in s. 99(7) of the amending Act) by 2001 c. 9, ss. 99(3), 110, Sch. 33 Pt. 3(1) Note 2
  7. F12S. 2(1C) repealed (1.11.2001) by 2001 c. 9, ss. 99(3), 110, Sch. 33 Pt. 3(1) Note 1
  8. F13Words in s. 2(2)(3) inserted (11.5.2001 with effect as mentioned in s. 99(9)(a) of the amending Act) by 2001 c. 9, s. 99, Sch. 31 para. 2
  9. F14Words in s. 2(2) inserted (with effect in accordance with Sch. 3 para. 11 of the amending Act) by Finance Act 2009 (c. 10), Sch. 3 para. 25(2)

Modifications

  1. C10S. 2(1) modified (1.12.2008) by The Value Added Tax (Change of Rate) Order 2008 (S.I. 2008/3020), arts. 1, 3