What is the nature of the supply?

Although the principal is VAT be applied on supplies of goods and services made by VAT registered bodies, certain supplies are exempt from VAT. Therefore, it is important to determine the ‘nature’ of a supply in order to establish whether or not it falls within one of the exemptions.
In most cases, particularly when buying or selling ‘goods’, it is obvious what is being supplied. However, complications can arise if the description on the invoice doesn’t describe what is actually provided. Therefore, it is important to be as clear and precise as possible, ensuring an accurate description is used on all invoices.

An additional complication is some types of supply are subject to VAT where the supplier belongs, whilst other types of supply are subject to VAT where the customer belongs. So, where the supplier and the customer are in different countries, defining the nature of the supply can be critical to determining where the VAT liability lies.


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