Commentary

V7.373 Exempt supplies—licence to occupy land

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.373 Exempt supplies—licence to occupy land

Part V7 Tax planning | Commentary

V7.373 Exempt supplies—licence to occupy land

The basic legislation in VATA 1994, Sch 9, Group 1 states that, subject to certain exceptions, the 'grant' of any 'interest in or right over' land or of any 'licence to occupy' land is exempt.

Grant

A grant of land is a transaction involving the transfer of the freehold or a leasehold of land. It also includes the surrender of an interest in the land (eg where a tenant relinquishes his interest in the land to the person that granted him the interest) and an assignment of an interest in the land, ie the transfer of a lease by one tenant to another.

Interest in or right over land

'Interest in or right over land' means that the person using the land has either a legal interest in the land (ie formal ownership of the land such as a freehold or leasehold interest), or a beneficial interest (that is, the right to receive the benefit of supplies of the land, eg sale proceeds or rental income without owning the legal interest). Rights over land include rights of entry and easements.

Licence to occupy land

HMRC regard a licence to occupy land as being created when the following criteria are met:

  1.  

    (a)     the licence should be granted in return for a payment made by the licensee

  2.  

    (b)     the licence must be to occupy a specific piece of land

  3.  

    (c)     the licence is for the

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