HMRC has replaced its six-step test to determine if an activity is “business” or “non-business” 
Activity is for business if: 
it results in a supply of goods or services for consideration (payment of money or money’s worth); and 
it’s made for the purpose of obtaining income (remuneration). 
Who does it affect? It’s no longer enough for a supply to be made for consideration for it to count as business (economic) activity. The activity must result in income (remuneration) for the provider.  
The change could have significant consequences affecting the right or requirement to register for VAT and also when to charge and reclaim VAT. The change will affect charities, businesses that receive grant income or subsidies, those that provide crêche facilities for workers’ children, non-profit organisations and any business that also has non-business activities. 
HMRC’s new definition of business activity means that charities, non-profit organisations and some businesses should review if they can or need to remain registered for VAT. They should only reclaim VAT relating to supplies which are business activities as now defined. 

Questions or queries? 

Mark Harvey - Fuller Spurling
Please do let us know if you have any questions or if you need any further help understanding the rules. – please call us on 01252 877477 or message us here. 

Information correct at time of publication 

This article was produced in June 2022 – please always check with Fuller Spurling that information is current, up to date and applicable to your situation. 
Tagged as: VAT
Share this post:
Our site uses cookies. For more information, see our cookie policy. Accept cookies and close
Reject cookies Manage settings