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HMRC internal manual

VAT Time of supply

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HM Revenue & Customs
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Legislation: UK secondary law (VAT Regulations 1995): Regulation 93 supplies in the construction industry

Law

93(1) Where services, or services together with goods, are supplied in the course of the construction, alteration, demolition, repair or maintenance of a building or any civil engineering work under a contract which provides for payment for such supplies to be made periodically or from time to time, those services or goods and services shall be treated as separately and successively supplied at the earliest of the following times -

(a) each time that a payment is received by the supplier,

(b) each time that the supplier issues a VAT invoice, or

(c) where the services are services to which paragraph (2) below applies, to the extent that they have not already been treated as supplied by virtue of sub-paragraphs (a) and (b) above -

(i) if the services were performed on or after 9th December 1997 and before 9th June 1999, the day which falls eighteen months after the date on which those services were performed, or

(ii) if the services are performed on or after 9th June 1999, the day on which the services are performed.

(2) This paragraph applies if, at the time the services were, or as the case may require, are performed -

(a) it was, or as the case may require, is the intention or expectation of -

(i) the supplier, or

(ii) a person responsible for financing the supplier’s cost of supplying the services or services together with goods, that relevant land would, or as the case may require, will become (whether immediately or eventually) exempt land or, as the case may be, continue (for a period at least) to be such land, or

(b) the supplier had, or as the case may require, has received (and used in making his supply) any supply of services or of services together with goods the time of supply of which -

(i) was, or

(ii) but for the issue by the supplier of those services or services together with goods of a VAT invoice (other than one which has been paid in full), would have been, determined by virtue of paragraph (1)(c) above.

(3) For the purposes of this regulation “relevant land” is land on which the building or civil engineering work to which the construction services relate is, or as the case may be, was situated.

(4) In this regulation references to a person’s being responsible for financing the supplier’s cost of supplying the services or goods and services are references to his being a person who, with the intention or in the expectation that relevant land will become, or continue (for a period at least) to be, exempt land -

(a) has provided finance for the supplier’s cost of supplying the services or services together with goods, or

(b) has entered into any agreement, arrangement or understanding (whether or not legally enforceable) to provide finance for the supplier’s cost of supplying the services or services together with goods.

(5) In this regulation references to providing finance for the supplier’s cost of supplying services or services together with goods are references to doing any one or more of the following, that is to say -

(a) directly or indirectly providing funds for meeting the whole or any part of the supplier’s cost of supplying the services or services together with goods,

(b) directly or indirectly procuring the provision of such funds by another,

(c) directly or indirectly providing funds for discharging, in whole or in part any liability that has been or may be incurred by any person for or in connection with the raising of funds to meet the supplier’s cost of supplying the services or services together with goods,

(d) directly or indirectly procuring that any such liability is or will be discharged, in whole or in part, by another.

(6) The references in paragraph (5) above to the provision of funds for a purpose referred to in that paragraph include references to -

(a) the making of a loan of funds that are or are to be used for that purpose,

(b) the provision of any guarantee or other security in relation to such a loan,

(c) the provision of any of the consideration for the issue of any shares or other securities issued wholly or partly for raising those funds, or

(d) any other transfer of assets or value as a consequence of which any of those funds are made available for that purpose,

but do not include references to funds made available to the supplier by paying to him the whole or any part of the consideration payable for the supply of the services or services together with goods.

(7) In this regulation references to the supplier’s cost of supplying the services or services together with goods are to -

(a) amounts payable by the supplier for supplies to him of services or of goods used or to be used by him in making the supply of services or of services together with goods, and

(b) the supplier’s staff and other internal costs of making the supply of services or of services together with goods.

(8) For the purposes of this regulation relevant land is exempt if -

(a) the supplier,

(b) a person responsible for financing the supplier’s cost of supplying the services or goods and services, or

(c) a person connected with the supplier or with a person responsible for financing the supplier’s cost of supplying the services or goods and services,

(d) is in occupation of the land without being in occupation of it wholly or mainly for eligible purposes.

(9) For the purposes of this regulation, but subject to paragraphs (11) and (13) below, a person’s occupation at any time of any land is not capable of being occupation for eligible purposes unless he is a taxable person at that time.

(10) Subject to paragraphs (11) and (13) below, a taxable person in occupation of any land shall be taken for the purposes of this regulation to be in occupation of that land for eligible purposes to the extent only that his occupation of that land is for the purpose of making supplies which-

(a) are or are to be made in the course or furtherance of a business carried on by him, and

(b) are supplies of such a description that any input tax of his which was wholly attributable to those supplies would be input tax for which he would be entitled to credit.

(11) For the purposes of this regulation -

(a) occupation of land by a body to which section 33 of the Act(a) applies is occupation of the land for eligible purposes to the extent that the body occupies the land for purposes other than those of a business carried on by that body, and

(b) any occupation of land by a government department (within the meaning of section 41 of the Act) is occupation of the land for eligible purposes.

(12) For the purposes of this regulation, where land of which a person is in occupation -

(a) is being held by that person in order to be put to use by him for particular purposes, and

(b) is not land of which he is in occupation for any other purpose,

(c) that person shall be deemed, for so long as the conditions in sub-paragraphs (a) and (b) above are satisfied, to be in occupation of the land for the purposes for which he proposes to use it.

(13) Paragraphs (9) to (12) above shall have effect where land is in the occupation of a person who -

(a) is not a taxable person, but

(b) is a person whose supplies are treated for the purposes of the Act as supplies made by another person who is a taxable person,

(c) as if the person in occupation of the land and that other person were a single taxable person.

(14) For the purposes of this regulation a person shall be taken to be in occupation of any land whether he occupies it alone or together with one or more other persons and whether he occupies all of that land or only part of it.

(15) For the purposes of this regulation, any question as to whether one person is connected with another shall be determined in accordance with section 839 of the Taxes Act.

Commentary

The tax points rules are found in 95(1). The rest of the regulation 95(2)-(15) sets out the criteria under which a tax point can occur on completion of the supply under 93(1)(c), This is to prevent exploitation for avoidance purposes. The different treatment provided for in 93(1)(c)(i) reflects an earlier version of the regulation which applied during the period mentioned. The normal (section 6 VATA 1994) time of supply rules apply to supplies of construction services where only a single payment is due under the contract. For further information see VATTOS9100.