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HMRC internal manual

VAT Time of supply

Basic tax points: performance of services: when are services 'performed'?

Performance of a service was considered by the Tribunal in the case of the Trustees For The Greater World Association Trust (VTD 3401). The Trust owned two properties on behalf of a religious charity called The Greater World Association Trust. In 1986 the properties were put up for sale with estate agents appointed by the trustees. In the event disposal of the properties took some time and it was not until July 1987 that legal completion took place. In the meantime the rules governing the trustees ability to recover the input tax on the estate agent’s fees had changed with effect from 1 April 1987.

The trustees therefore sought to argue that the tax point for the supply by the estate agents took place before 1 April. This was on the basis that the services were performed, and a basic tax point had thus been established, at the time when the prospective buyer was found and entered into the contract for the sale. This argument was rejected by the Tribunal which held that, whilst introducing the buyer represented the major element of the estate agent’s supply to the trustees, there was nothing to indicate that they had fully discharged their contractual obligations at that time. The estate agents were not entitled to receive their fees until completion of the sale and in the meantime could still have been required to perform further services such as handing over of the keys. In arriving at this decision the Chairman observes:

‘Where the services are performed over a period of time and there is one consideration for the services as a whole, then ‘the time when services are performed’ must, I consider, mean the point in time when all the services to be supplied have been performed.’

Applying this principle is usually a question of establishing the contractual obligations of the person making the supply. Once this has been done there is normally little difficulty in determining when all the work required to fulfil those obligations has been completed.