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HMRC internal manual

VAT Land and Property

From
HM Revenue & Customs
Updated
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Supply: which land related supplies are 'goods' and which are 'services'?

The grant, assignment or surrender of a major interest in land is a supply of goods under VAT Act 1994, Schedule 4, paragraph 4. A major interest is either the freehold sale or the grant, assignment or surrender of a lease of more than 21 years (20 years or more in Scotland).

The grant, assignment or surrender of an interest in land which is not a major interest is normally a supply of services.

If land and buildings are business assets and are given away there is a supply of goods if the gift consists of a major interest. If the interest being transferred for free is less than a major interest there is no supply for VAT purposes. The same applies where land and buildings are put to a prolonged private use by the owner. In both cases, however, an adjustment to input tax under the capital goods scheme may be required (see Notice 706/2 Capital goods scheme).

If the land and buildings are temporarily used for a non-business purpose, such as loaned outside the business, there is no supply for VAT purposes but, as above, an adjustment to input tax under the capital goods scheme may be required.