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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:

  • charities

  • 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.


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