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HMRC internal manual

VAT Time of supply

Legislation: UK secondary law (VAT Regulations 1995): Regulation 85 leases treated as supplies of goods


85(1) Subject to paragraph (2) below, where the grant of a tenancy or lease is a supply of goods by virtue of paragraph 4 of Schedule 4 to the Act, and the whole or part of the consideration for that grant is payable periodically or from time to time, goods shall be treated as separately and successively supplied at the earlier of the following times -

(a) each time that a part of the consideration is received by the supplier, or

(b) each time that the supplier issues a VAT invoice relating to the grant.

(2) Where in respect of the grant of a tenancy or lease such as is mentioned in paragraph (1) above the supplier, at or about the beginning of any period not exceeding one year, issues a VAT invoice containing, in addition to the particulars specified in regulation 14, the following particulars -

(a) the dates on which any parts of the consideration are to be become due for payment in the period,

(b)the amount payable (excluding VAT) on each such date, and

(c) the rate of VAT in force at the time of the issue of the VAT invoice and the amount of VAT chargeable in accordance with that rate on each of such payments,

goods shall be treated as separately and successively supplied each time that a payment in respect of the tenancy or lease becomes due or is received by the supplier, whichever is the earlier.

(3) Where, on or before any of the dates that a payment is due as stated on an invoice issued as described in paragraph (2) above, there is a change in the VAT chargeable on supplies of the description to which the invoice relates, that invoice shall cease to be treated as a VAT invoice in respect of any such supplies for which payments are due after the change (and not received before the change).


A supply of leasehold property, where the lease is for a period in excess of 21 years, is treated as a supply of goods. Regulation 85 applies where the consideration for the lease includes elements, such as rent or ground rent, which are to be payable periodically during the lifetime of the lease, rather than at the outset when the lease is first granted.

The regulation also allows for the issue of a single VAT invoice, sometimes referred to as a period VAT invoice (see VATTOS5220), covering all the payments or instalments that are due in respect of the supply over a period not exceeding a year.

For further information see VATTOS9350.