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HMRC internal manual

VAT Land and Property

From
HM Revenue & Customs
Updated
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Single supplies: where leasing or letting is just one element of a contract: trading concessions

A trading concession is created when an owner or occupier of premises grants a concessionaire the right to trade on, or on part of, those premises. This is regarded as a single supply of an interest in or licence to occupy land if:

  • the concessionaire is granted a clearly defined area or site from which to trade with the right to exclude other people, and
  • any facilities supplied are clearly incidental to the land.

Examples of trading concessions

The following table will help you to decide whether a concession can be treated as a single supply of land:

Supply of land Not a supply of land
   
catering concessions involving specified kitchen or restaurant areas in public houses, railway stations, motorway service stations, airports etc. concessions which relate to a general rather than a specific area, such as:
  • the right to sell ice cream anywhere on a beach (sometimes called “ambulatory concessions”), or
  • for taxi cab operators to ply for hire on a railway station forecourt     
      concessions to operate bars, news-stands, kiosks or other outlets in railway stations, restaurants, theatres, airports etc. arrangements where the owner or occupier of the premises or their staff merely sell goods on behalf of another person, (whether or not a specific site is allocated for that person’s goods.)
However, sometimes in shop-within-shop cases the concessionaires may sell their goods to the store owner at the point of sale, and claim that they are paying the store owner for a taxable supply of services for selling their goods. This is merely a device to create an artificially taxable supply, and in such circumstances, provided that the concessionaires employ their own staff, the consideration payable to the store owner is still for a licence to occupy land.    
  concessions to operate ‘shops-within-shops’ (the allocation by a retail store of an area within the store for exclusive use of a concessionaire). A trading franchise which merely permits a person to sell another person’s goods or use another person’s name (ie where there is no provision of trading premises by the franchiser to the franchisee).

Care should be taken to distinguish between trading concessions and other arrangements where, in addition to a lease or licence to occupy the premises, other services are provided which are of value in their own right. These may include the right to use the store owner’s name or trading style, expertise, trading contracts and training facilities, in which case they form a taxable supply, separate from the land.