The Value Added Tax Act 1983 was repealed and replaced by this legislation.

[2] To encourage outsourcing it provides a mechanism through which government departments, including NHS trusts, can qualify for refunds on contracted out services.

[3] The Value Added Tax Act 1994 was enacted on 30 November 1994, and came into force on 1 January 1995.

The introduction of the Value Added Tax Act 1994 was necessary to implement the European Union's VAT system in the UK.

The EU had mandated that all member states should adopt a common VAT system, in order to simplify the tax system for businesses operating across borders.