As exemption is very much the norm for transactions in land and property, it is appropriate to look at precisely what is exempt from VAT. There is one complete group within the exemption schedule to VATA 1994 which is devoted entirely to land and buildings: VATA 1994, Sch 9 Group 1.
The basic principle in VATA 1994, Sch 9 Group 1 is that the grant of any interest in or right over land or licence to occupy land is exempt unless it is—
(a) excluded from exemption (and therefore standard-rated) under VATA 1994, Sch 9 Group 1 Item 1, paras (a) to (n); or
(b) zero-rated under either VATA 1994, Sch 8 Group 5 or Group 6; or
(c) subject (with certain exceptions) to the option to tax (VATA 1994, Sch 10 part 2).
The default position is therefore that where the grant of any interest in property is made, it is exempt unless it can be made to fall outside VATA 1994, Sch 9 Group 1.
The question of what is, or is not, the letting or leasing of land continues to create difficulties. In the case of John Window (2001) VAT Decision 17186, the VAT & Duties tribunal ruled that livery services supplied with stabling services were part of a single supply of land which was exempt from VAT. This was in contrast to HMRC's view that there was a single standard-rated supply of livery services. HMRC has since issued a Business Brief (21/01, 21 December 2001)