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HMRC internal manual

VAT Land and Property

HM Revenue & Customs
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Single supplies: where leasing or letting is just one element of a contract: the different types of single supplies

In cases where leasing or letting is an element of a single supply, it is necessary to establish the nature of the over-arching supply to determine whether, as a whole, the supply can be classified as a ‘leasing or letting of immoveable property’.

Two categories of single supply have been identified in case law

  • Supplies comprising a principal element to which all other elements are ancillary (in other words, they do not represent an aim in themselves but are a better means of enjoying the principal element). In these instances, the supply will take the characteristic of its principal feature. This is the type of single supply that was identified in Card Protection Plan C349/96.
  • Supplies comprising a bundle of elements, which are integral to each other, but where it cannot be said that there is one principal element to which all other elements are ancillary. [The ECJ has described such circumstances in Levob C41/01, paragraph 22, as ‘where two or more elements or acts supplied by the taxable person to the customer, being a typical consumer, are so closely linked that they form, objectively, a single indivisible economic supply which it would be artificial to split’]. In such cases, it is necessary to establish the nature of the overarching supply as a whole to determine whether it can be best described as the making available of property for occupation (‘leasing or letting of immovable property’) or the provision of a taxable service. Most supplies consisting of a bundle of elements fall within the latter category.

Single supplies comprising a bundle of elements will not be classified as a ‘leasing or letting of immovable property’ unless the overarching single supply has all characteristics of a leasing or letting described in section 6100 above. Remember also to look at the transaction as a whole and assess whether its essential nature is merely the passive making available of property. In Temco C-284/03, (see paragraph 20 of decision). and other ECJ cases, the ECJ described a leasing or letting as a ‘relatively passive activity linked simply to the passage of time and not generating any significant added value’ as opposed to activities which were industrial and commercial in nature and have as their subject matter something which is ‘best understood as the provision of a service rather than simply the making available of property’. The UK Courts have endorsed this approach in their judgements, amongst others, in the cases of Best Images Limited [2010] UKFTT TC00480 (see paragraphs 33 and 37); and James Gillan & Margaret Gillan t/a Gracehill Golf Course [2010] UKFTT TC00327 (see paragraph 41).