Where a person produces goods by applying to another person’s goods a treatment or process, the UK treats it as a supply of services.

Zero-rating is retained for process work carried out on customers’ goods where that work results in production of goods which are themselves zero-rated (e.g. food and children’s clothing). The UK opted to ensure that, from 1 January 1996, there was no change in the VAT treatment of this particular sort of process work (VATA 1994, s. 30(2A), as inserted by FA 1996, s. 29(2)).

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