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HMRC internal manual

VAT Place of Supply of Services

Establishment making or receiving the supply: Whether land creates an establishment

Land or property does not in itself create a business or fixed establishment in the UK. There must be a head office from which business is carried out for there to be a business establishment, or sufficient human and technical resources permanently present for making or receiving the supply for there to be a fixed establishment.

In the Tribunal case of W.H Payne & Co (LON 95/1436A), [1995] VATDR 490, (VTD 13668), Trafalgar, whose registered office was in the Virgin Islands and main administrative office was in Jersey, purchased a leasehold flat in London for letting to tenants. The letting and day to day management of the property were handled on behalf of Trafalgar by two separate, unrelated companies. Payne provided accountancy and taxation services relating to UK tax requirements in respect of the flat, and also received rental moneys from the managing agents for transmission to Trafalgar. Among other points in the decision, the Tribunal did not accept that the property in London created either a business or a fixed establishment in the UK.