Overview of VAT and property issues

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Overview of VAT and property issues
  • What are land and property transactions?
  • Supplies of land
  • Rights over land
  • Licence to occupy land
  • Supply of goods or services
  • Exempt supplies of land
  • Supplies of land that are not exempt from VAT
  • Conclusion

Overview of VAT and property issues

The VAT treatment of transactions relating to land and property is very complex. Care needs to be taken when determining the correct VAT treatment. This guidance note is intended to provide you with a brief overview of the main points that need to be considered, as well as links to other guidance notes that provide a more in depth analysis of the points raised.

Notice 742

More detailed information on land and property transactions can be found in VATLP01000

What are land and property transactions?

The following section provides a brief overview of the most common types of land and property transactions.

See also VAT and Property, para 2.29.

Supplies of land

For VAT purposes, the term 'land' includes any of the following:

  1. buildings

  2. civil engineering works

  3. works

  4. walls

  5. trees and plants

  6. waterways, ways, watercourses and commons

  7. any other structure or natural object in, under or over 'land' that continues to remain attached to it (ie certain fixtures and fittings)

VATA 1994, Sch 4, parah 4; VATLP02200

A business makes a supply of land if it grants one of the following:

  1. a grant of a freehold or leasehold interest in the land

  2. an assignment of a lease by an existing tenant to a new tenant

  3. a surrender of an interest in land to the person who granted the interest

An interest in land includes a 'legal' or 'beneficial' interest in the land. A legal interest usually constitutes some formal ownership of an interest or right of land (ie a freehold or leasehold interest).

A beneficial interest is the right to receive the benefit of any supplies made in the land in question and another party could own the legal interest in the land. The benefit could be the right to receive any rental income or sale proceeds.

Rights over land

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