VIT25800 - Is it input tax: how to work out tax due under the Supply of Services Order
The basis of any charge that may arise under the Supply of Services Order 1993 is the cost of providing the services. It arises when the use occurs, with a tax point at the end of the prescribed accounting period.
The legislation that values the charge is Article 5, Supply of Services Order 1993. It envisages that a fair and reasonable split of the cost of services is made so that the private usage is properly taxed.
Please note that it is only the VAT bearing cost of providing the services that should be included in the valuation. This is because the Supply of Services Order seeks only to ensure that the overall recovery of input tax on expenditure fairly reflects anything other than business use. This is consistent with achieving the fairness and consistency envisaged by the courts.
See the relevant section at VIT25600 for more about the application of a charge to account for any private use of a business asset.