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HMRC internal manual

VAT Place of Supply of Services

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HM Revenue & Customs
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Land-related services: Services relating to land

Construction, demolition, etc

Sub-paragraph 2(e) to paragraph 1 of Schedule 4A relates to the types of physical building work carried out by building contractors and subcontractors. It covers services in the course of construction, alteration, demolition, repair or maintenance of any building or civil engineering work on land, including painting, decorating, and the supply of plant or machinery together with an operator for work on a construction site. However, the supply of the hire of plant and machinery without an operator is a supply of hired goods.

Estate Agents and other professionals

Subparagraph 2(f) covers the services of professionals such as estate agents, auctioneers, architects, surveyors and engineers, in so far as they are directly related to a specific site (or sites) of land. It does not apply where such services are only indirectly related to land, or where the land-related service is only an incidental component of a more comprehensive service.

The Tribunal, in the case of Kenneth Richard Daunter (LON/2006/671), helped to clarify the meaning of the term land-related where it involves professional services such as legal services supplied by a solicitor. The Appellant, a resident of Jersey, funded the purchase of a flat in the UK which was used by a different person. The Appellant entered into an agreement with the occupant that allowed them to remain in the property during their lifetime, after which vacant possession would revert to the Appellant. On the death of the occupant the Appellant took legal action against the deceased’s estate to secure title to the property.

The Appellant argued that the services supplied by the solicitor were subject to the rules under the then Schedule 5 to the VAT Act 1994. That meant the place of supply was where the Appellant belonged, in Jersey. However, HMRC maintained that the place of supply was where the land was situated, the UK.

In dismissing the appeal the Tribunal concluded that, adopting the reasoning of the ECJ in Rudi Heger (C-166/05), the property in question was a central and essential element and therefore the place of supply of the legal services was where the land was situated (the UK).