VAT – The two stage Business Test
Newly released rules to determine whether a transaction is a business transaction for VAT purposes, or isn’t, are now available (from 1st June).
The new rules will be particularly relevant to:
non-profit making organisations
businesses providing nursery and crèche facilities
businesses that receive grants or subsidies
organisations or businesses carrying out non-business activities
Previously, there had been 6 indicators (taken from historical cases - notably the Lord Fisher case, which resulted in many calling the indicators the 'Lord Fisher Test') to help determine whether a business activity should be classed as a business transaction for VAT.
But, from now, the new 2-stage test, is the approach that should be taken in determining whether an activity constitutes a business activity.
Full details and the 2 stage test can be found here but please don't hesitate to contact us if you require assistance in this area.