© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
C1. Supplies in general
Meaning of supply
- Anything done for consideration
"(1) Schedule 4 shall apply for determining what is, or is to be treated as, a supply of goods or a supply of services.
(2) Subject to any provision made by that Schedule and to Treasury orders under subsections (3) to (6) below—
(a) “supply” in this Act includes all forms of supply, but not anything done otherwise than for a consideration;
(b) anything which is not a supply of goods but is done for a consideration (including, if so done, the granting, assignment or surrender of any right) is a supply of services." (VATA 1994, s.5)
- Objective concept
"[22] Likewise, the analysis of the terms ‘supply of goods’ and ‘supply of services’ shows that those terms, which define, in part, taxable transactions under Directive 2006/112, are objective in nature and apply without regard to the purpose or results of the transactions concerned (see, to that effect, judgment of 12 January 2006 in Optigen and Others, C‑354/03, C‑355/03 and C‑484/03, EU:C:2006:16, paragraph 44)." (Lajvér C-263/15)
- Does not depend on intention
"[21] The Court has also already held that the concept of ‘supply of goods’ is objective in nature and that it applies without regard to the purpose or results of the transactions concerned and without its being necessary for the tax authorities to carry out inquiries to determine the intention of the taxable person in question or for them to take account of the intention of an operator other than that taxable person involved in the same chain of supply (judgment of 17 October 2019, Unitel, C‑653/18, EU:C:2019:876, paragraph 22)." (W C-602/24)
Things that do not amount to a supply
- Steps that are a pre-condition to a supply by the other party
"[104] Equally plainly, the service could not be provided at all unless the banks made available to the SPVs on a rolling basis a sufficient number and value of Receivables, to enable the SPVs to use them as first class security. A car owner cannot obtain a repair service unless he bails his car to the mechanic. While there may be other reasons why the bailment is not a supply by the car owner, one of them is that the owner is not providing a service to the mechanic at all.
...
[108] I have been able to overcome my reluctance to recognise such a new class for the following reasons. First, the identification of the class flows from the application to it of exactly the same principle that underlies the existing classes. The transfer is nothing more than the compliance with a necessary condition for the supply of the service by the transferee to the transferor. Secondly, the transaction is not one of barter, where the recognition of cross supplies in a single transaction is established. Third, there is a close analogy between a securitisation service and the supply of credit on the security of revolving book debts. In neither of them does the assignment of the subject matter of the security (the receivables) make sense as a VAT supply. My impression from reading the highly experienced Tribunals' Decisions is that they were powerfully influenced by an appreciation that a positive answer to the question produced a VAT nonsense. They therefore felt driven to the only analysis offered to them that produced a negative conclusion." (MBNA Europe Bank Limited v. HMRC [2006] EWHC 2326 (Ch), Briggs J)
Distinguish cases where the step is not essential to the provision of the service
"[42] I also agree with the Upper Tribunal that the facts in this case are materially different from those in MBNA. The transfer of securities in MBNA was an essential part of the transaction. Here they are not. The customer can only get the services if he makes a deposit, but he does not need to use the services provided by IDUK, and may not do so." (ING Intermediate Holdings Limited v. HMRC [2017] EWC Civ 2111, Arden, Kitchin, Floyd LJJ)
- No supply where government, acting in common interest, compensated farmer for ceasing milk production because no benefit/consumption
"[20] In a case such as the present one, there is no consumption as envisaged in the Community VAT system.
[21] As the Advocate General notes at point 27 of his Opinion, by compensating farmers who undertake to cease their milk production, the Community does not acquire goods or services for its own use but acts in the common interest of promoting the proper functioning of the Community milk market.
[22] In those circumstances, the undertaking given by a farmer that he will discontinue his milk production does not entail either for the Community or for the competent national authorities any benefit which would enable them to be considered consumers of a service. The undertaking in question does not therefore constitute a supply of services within the meaning of Article 6(1) of the Directive." (Mohr C-215/94)
"[31] The Court has thus differentiated, from the very beginning, according to whether there exists a supply for the purposes of VAT law in return for which the subsidy was granted. ( 15 ) This was rejected by the Court ( 16 ) where the operator merely agreed to produce less milk and to receive compensation (a subsidy) in return. The Court found that the discontinuation of milk production by the farmer was in the interest of the subsidy provider, but did not provide a consumable benefit to it, and was instead in the common interest of promoting the proper functioning of the EU milk market. ( 17 ) In particular, as the Court expressly stated, the farmer did not provide services to an identifiable consumer or any benefit capable of being regarded as a cost component of the activity of another person in the commercial chain. ( 18 )" (PSA C-615/23, AG Kokott)
Involuntary supplies
- Parking service supplied even though parking was in breach of regulations
"[42] That is the case here, in so far as, as observed by the Advocate General in point 66 of his Opinion, there is a link between the fact that Apcoa receives control fees for parking in breach of the regulations and the parking undertaken by the motorist concerned in specific circumstances determined by Apcoa which give rise to that increased fee. The need for monitoring of parking in breach of the regulations and, consequently, the imposition of such control fees would not exist if the service of providing a parking space was not supplied in advance." (Apcoa Parking Danmark C-90/20)
- Illegally taken electricity was supply for consideration
"[30] In the present case, the direct link between the unlawfully consumed electricity and the sum claimed in return by Fluvius is clear from the information provided by the referring court, since MX used the electricity at his residential address and Fluvius was able to establish the quantity thus used by drawing up a statement of the electricity consumption between 7 May 2017 and 7 August 2019 by reading the meter at that address. The amount corresponding to the cost of the electricity unlawfully consumed was thus included in the sum claimed from MX." (Fluvius Antwerpen C-677/21)