VATLP02730 - Supply: place of supply and liability of exploration and production licences in the UK oil industry: place of supply for oil licences
Grant of a licence
If the licence relates to an area outside UK territorial waters (12 mile limit), the grant is treated as a supply which is outside the UK. The supply is one of services relating to land as defined in Schedule 4A of the VAT Act 1994 and place of supply is where land is situated.
Assignment of rights
It is common for exploration or production licences to be granted to either one operator or a consortium of operators, which then divide up the rights granted. One company will sell rights to another. The assignment of exploration or production rights is a service relating to land as defined in Schedule 4A of the VAT Act 1994 and the place of supply is where the land is situated.