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HMRC internal manual

VAT Registration

Entity to be registered: trusts and pension funds: law

There is currently no provision in VAT law for the registration of business activities carried on by trustees, in their capacity as trustees, using trust property.

However, this does not exempt them from the obligation to register where they are making taxable supplies above the registration threshold.

Trusts can be registered either as a partnership under the VAT Act 1994, section 45 or as an unincorporated association under section 46. We are advised that, by and large, we should rely on section 46. Where land and property is involved (in particular, joint owners of land and property) we should register them under section 45.

Where more than one person holds title to land or property, the Law of Property Act 1925, section 34 deems that a statutory trust for sale exists. Where those persons commercially exploit such land or property, then a liability to register for VAT may arise (subject to the normal registration rules). As it is only the owners who are able to commercially exploit the land or property (by, for example, letting or developing it), any VAT registration must be effected in joint names. There is no specific provision for the registration of trusts, so any joint registration must either be as a partnership (VAT Act 1994, section 45) or as some form of unincorporated association (VAT Act 1994, section 46). Legal advice suggests that the most appropriate option is to treat co-owners as a partnership for VAT purposes.

In accordance with legal opinion, where co-owners become liable to register for VAT, they should be registered as a partnership for VAT purposes. However, where the co-owners are the same as the partners in a firm, a separate registration will not normally be required. For example, where A, B, C and D are co-owners of land, but are also the partners in a firm of solicitors, they should account for all the activities under one registration.

Due to restrictions imposed by the Law of Property Act, title to land and property can be held in a maximum of four names. This can create a situation where four nominated people hold title to a property on behalf of a larger body. For example, A, B, C and D hold title to a property on behalf of a firm of solicitors A, B, C, D, E and F. Where it is clear that the property is in substance an asset of the larger partnership, we would not require separate registration of the co-owners.