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HMRC internal manual

VAT Land and Property

Exemption: European concept of 'leasing or letting of immovable property': essential characteristics: the agreement must relate to immovable property

The concept of ‘immovable property’ includes the ground itself or something fixed to or in the ground that cannot be easily dismantled or easily moved. Generally speaking, anything that constitutes ‘land’ in UK land law (see VATLP05400) will also be immovable property. However, ‘immovable property’ does have its own meaning in community law, which is independent of any definition of ‘land’ within national law.

Degrees of movability or immovability

Example of ‘immovable property’

In the case of Rudolf Maierhofer C 315/00, the ECJ reached the conclusion that it is not necessary for a structure to be inseverably fixed to or in the ground in order for it to be ‘immovable property’. It is sufficient for it to be fixed in such a way that it cannot be easily moved or easily dismantled. The Maierhofer case concerned single-storey and two-storey buildings constructed from prefabricated components, which stood on concrete bases erected on concrete foundations sunk into the ground. The wall panels were secured to the foundations by bolts and the roof was tiled. The buildings could be dismantled on expiry of the lease for subsequent re-use but by having recourse to eight persons over ten days. The ECJ found that the buildings were ‘immovable’.

Example of ‘movable property’

By contrast with Maierhofer, the Tribunal in the later case of University of Kent (VTD18625), found that the prefabricated ‘sleep units’ that were subject of that appeal were not immovable property. The Tribunal accepted that

“…. there is a scale of degrees of movability or immovability. Whether, in the light of Rudolf Maierhofer, the units are to be regarded as movable or immovable depends where on this scale they fall.”

The sleep units in question were delivered by lorry and placed in position on concrete blocks by the driver and his assistant using the lorry’s own crane. Other contractors connected the units to the university’s electricity and water supply and erected timber skirting round the units. They were also plumbed into the existing drains. Other than through the skirting, which was fixed to the unit and bolted to the ground, the units were free standing.

The Tribunal looked at the ease with which the units could be dismantled and removed. The electricity, water and drainage connections were removed in less than a day by contractors - each unit then taking up to an hour an a half to be lifted back onto the lorry by the driver and one other and removed from the site. Once the units were removed, minor repairs to the site were necessary. The Tribunal concluded that the units were not sufficiently attached to the ground to render them ‘immovable’ for the purposes of the exemption.

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Bodies of water

The ECJ has ruled in Fonden Marselisborg Lystbådehavn and Case C-166/05 Heger [2006] that an area which is wholly or partly underwater can itself be categorised as immovable property that can be leased or let.