VWRHS3045 - Treatment of services associated with goods held within warehouses: Treatment of services that create new UK product

Services carried out on goods (whether imported, acquired, supplied or home-produced) that change the nature of the product are relieved from VAT. Equally, no VAT is due on the import, acquisition or supply of the original goods.

This is because the goods upon which the process has been carried out cease to exist and therefore can never be removed from the warehouse.

VAT will only be due if the new goods are subsequently supplied or have a further service carried out on them that does not create new UK product (for example, secondary packaging).