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HMRC internal manual

VAT Land and Property

Exemption: what constitutes land?

For the purpose of Group 1, Schedule 9, ‘land’ includes any structures and natural objects attached to the land so long as they remain attached to it. The following table provides common examples. This list is not exhaustive.

Structures, artificial features, etc Natural features
Buildings Plants
Walls Trees
Fences Hedges
Fixtures Water courses
Civil engineering works Commons

A person who owns an interest in land usually has the same interest in anything fixed to the land (buildings, trees, fences etc), and generally has the right of ownership of the minerals under the land and the game or fish on the land.

Evidence of a supply of land

You will normally find that there will be a written agreement in the form of a transfer, conveyance, lease, deed, tenancy agreement or licence to occupy agreement. If you are in any doubt about the nature or liability of the supply, first ask to see the documentation.

Whether the grant of a licence is an exempt ‘licence to occupy’ or merely a taxable licence to use or trade from the land will depend on the characteristics of the transaction, all of which must be considered. This can prove difficult where, for example, the licence is the subject of an oral agreement which can often be the case. Similarly, a licence will often be granted together with other services as part of a single supply. In such cases, the overarching single supply may be taxable even if the licence to occupy is the most significant element of the supply. See VATLP06000 for further guidance on single supplies.

In all cases and in addition to seeking all the relevant documentation, you should establish what happens in practice before considering whether or not the supply can be characterised as an exempt supply of land. You should not take at face value an agreement which purports to create a licence to occupy land.

You will find guidance on licences to occupy land at VATLP05600.