The scope and legal basis of how VAT is charged on taxable supplies is defined as follows in the VAT Act 1994:

VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him.

There are four conditions that must be satisfied in order for an activity to be within the scope of UK VAT. These conditions are that the activity:

1. Is a supply of goods or services
2. That the supply takes place in the UK
3. Is made by a taxable person
4. Is made in the course or furtherance of any business carried on or to be carried on by that person

The fourth point above is a condition that needs to be carefully considered when deciding whether an activity is within the scope of VAT. This concept of 'business' is one of the less well-known rules and care must be taken to ensure that VAT is correctly charged.

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