# The Indirect Taxes (Notifiable Arrangements) Regulations 2017, Regulation 4: Retail supplies – splitting and value shifting

Extent: E+W+S+N.I.

(1) An arrangement which meets the following description is a notifiable arrangement.
(2) A person (“A”) makes a supply (“supply 1”) of goods or services to a retail customer (“C”).
(3) A, or another person (“B”), makes a supply (“supply 2”) of other goods or services to C.
(4) In relation to supply 1 and supply 2—
(a) condition 1 or 2 is met; and
(b) condition 3 is met.
(5) Condition 1 is met if—
(a) were supply 1 and supply 2 made as a single supply or part of a single supply to C, that single supply would be taxable at the standard or reduced rate of VAT; and
(b) supply 1 or supply 2 is, or both are,—
(i) taxable at the reduced rate of VAT;
(ii) a zero-rated supply; or
(iii) an exempt supply, except a supply which is subject to insurance premium tax at the higher rate.
(6) Condition 2 is met if—
(a) were supply 1 and supply 2 made as a single supply or part of a single supply to C, that single supply would be an exempt supply; and
(b) supply 1 or supply 2 is, or both are,—
(i) taxable at the standard or reduced rate of VAT; or
(ii) a zero-rated supply.
(7) Condition 3 is met if it would be reasonable to conclude that two or more of the following apply—
(a) C would not agree to receive supply 1 without also agreeing to receive supply 2;
(b) where supply 2 is made to C by B, B makes the supply with the agreement of A;
(c) supply 1 and supply 2 would be made as a single supply or part of a single supply to C were it not for a VAT advantage which is obtained, or which may be obtained, by making those supplies separately to C;
(d) the business model of A or B (or both) assumes that—
(i) only A will make supply 1 to C;
(ii) only A or B (as the case may be) will make supply 2 to C; and
(iii) the agreements to make supply 1 and supply 2 will be entered into with C at or about the same time;
(e) of supply 1 and supply 2, at least one is dependent on the other;
(f) were supply 1 and supply 2 made as a single supply or part of a single supply to C, that supply would be made at or about the same price as the price of both supply 1 and supply 2 are made to C;
(g) a higher profit is generated from whichever of supply 1 or supply 2 is the supply which obtains the greater VAT advantage.
(8) In this regulation, “zero-rated supply” has the meaning given by section 30 of the Value Added Tax Act 1994, excluding a supply of goods or services within items 2(d) and (g) and 8 to 13 of Group 12 in Part 2 of Schedule 8 to that Act.

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Source: https://www.legislation.gov.uk/uksi/2017/1216/regulation/4 (the official version)
Page: https://openlegislation.uk/indirect-taxes-notifiable-arrangements-regulations-2017/regulation-4
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.