GAP is a plant hire company that provides equipment for various projects, including those requiring fuel such as red diesel. The customer has the choice to use the fuel provided or to refill the tank themselves. If the customer returns the plant with less fuel than provided, GAP issues an invoice for the fuel supply. The question was whether the supply of fuel was separate from the supply of plant for hire and therefore eligible for the reduced VAT rate of 5%. The Tribunal concluded that GAP’s supply of plant for hire and fuel were separate supplies and subject to different VAT liabilities. The customer had the freedom to choose whether to obtain fuel from GAP or a third party, and the supply of fuel was contingent on several factors.
Source KPMG
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