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HM Revenue and Customs Brief 22/12


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Issued 2 August 2012

The place of supply of services connected to land

This Brief provides a statement of HM Revenue & Customs' (HMRC’s) policy on the place of supply of services connected to land following discussions at EU level. It also details changes to HMRC’s published policy in respect of the treatment of exhibition stands, storage and warehousing, and access to airport lounges.

The Brief is concerned only with determining the place of supply of these services. It does not affect HMRC’s guidance or policy on the rate of tax that applies to any such supplies.


This Brief is aimed at businesses that make or receive supplies of services connected to land and property. In particular it will affect businesses that:

  • supply or buy in stands at exhibitions
  • store goods for overseas customers
  • provide access to airport lounges


The place of supply of services rules are an important concept in VAT as they are used to determine the country in which VAT is due so as to avoid either taxing the same supply twice or not taxing it at all. If a supply of services takes place in the UK then UK VAT will be due, but if the supply takes place in another EU Member State then it will be subject to VAT in that Member State.

In most cases where services are supplied by a business in the UK to a business customer in another Member State then no UK VAT is charged by the supplier. Instead the customer has to account for VAT in their own Member State using the 'reverse charge'. Similarly, most services supplied by UK businesses to business customers located outside the EU will not be subject to UK VAT.

However, in the case of services connected to land and property, Article 47 of the EU VAT Directive makes the service subject to VAT in the country where the land is situated. So, if the land is located in the UK, then UK VAT will be due. This VAT may be recovered by business customers, subject to the normal rules.

The changes to the place of supply rules from 1 January 2010 and 1 January 2011, highlighted differences in the treatment of certain supplies in various Member States. This has led to some businesses suffering double taxation. As it has not been possible to solve this issue in isolation, HMRC has been working with the Commission and EU Member States to try to agree the uniform application of Article 47 (services connected to land and property).

As a result of these discussions HMRC is changing aspects of its policy on the place of supply of:

  • stands at exhibitions
  • storage of goods
  • airport lounges

Further details of these changes are given below.

What do we mean by land?

For the purpose of determining the place of supply, land means any:

  • specific part of the earth, on, above or below its surface, over which title or possession can be created
  • building or construction fixed to or in the ground above or below sea level which cannot be easily dismantled or moved
  • item making up part of a building or construction and without which it is incomplete (such as doors, windows, roofs, staircases and lifts)
  • item, equipment or machine permanently installed in a building or construction which cannot be moved without destroying or altering the building or construction

When is a service related to land?

In order for a service to be land related for determining the place of supply it must have a sufficiently direct connection with a specific piece of land.

This will include services:

  • derived from land and where the land is a central and essential part of the service
  • intended to legally or physically alter a property

Examples of services relating to land which are subject to VAT where the property is situated

  • Construction or demolition of a building or permanent structure (such as pipelines for gas, water or sewage).
    Surveying and assessing property.
  • Valuing property, including for insurance or loan purposes.
  • Providing accommodation in hotels, holiday camps, camping sites or timeshare accommodation.
  • Maintenance, renovation and repair of a building (including work such as cleaning and decorating) or permanent structure.
  • Property management services (but not the management of a property investment portfolio).
  • Arranging the sale or lease of land or property.
  • Drawing up of plans for a building or part of a building designated for a particular site.
  • On-site security services.
  • Agricultural work on land (including tillage, sowing, watering and fertilization).
  • Installation and assembly of machines which, when installed, will form a fixture that cannot be easily dismantled or moved.
    The granting of rights to use all or part of a property (such as fishing or hunting rights and access to airport lounges).
    Legal services such as conveyancing and drawing up of contracts of sale or leases.
  • Bridge or tunnel toll fees.
  • The supply of space for the use of advertising bill-boards - for example the leasing of a plot of land or the side of a building to allow a billboard to be erected.
  • The supply of plant and equipment together with an operator, to allow the customer to carry out work on land or property where the supplier has responsibility for the execution of work.

Examples of services not relating to land

  • Drawing up of plans for a building or part of a building that do not relate to a particular site.
  • Arranging the supply of hotel accommodation or similar services.
  • Installation, assembly, repair or maintenance of machines or equipment which are not, and do not become, part of the land or property.
  • Management of a property investment portfolio.
  • Advertising services that involve the use of a billboard.
  • The supply of equipment with an operator, where it can be shown that the supplier has no responsibility for the performance of the work.

Stand space at exhibitions and conferences

Currently HMRC regards the supply of specific stand space at an exhibition or conference as a supply of land. This policy will continue where the service is restricted to the mere supply of space without any accompanying services.

However, where stand space is provided with accompanying services as a package, this package (stand and services) will no longer be seen as a supply of land with land related services but will be taxed under the general place of supply rule (customer location) when supplied to business customers.

Accompanying services provided as part of a package includes such things as the design and erection of a temporary stand, security, power, telecommunications, hire of machinery or publicity material.

Storage of goods

Current HMRC policy is to see all supplies of storage space as land related. This will change so that where a supplier grants the right to use a specific area of a UK warehouse or storage area for the exclusive use of the customer to store goods, the service will be treated as relating to land and subject to VAT in the UK. However, where the supplier agrees to store goods but does not grant a right to a specific area for the exclusive use of the customer, this will not be seen as a land related supply but will be treated as falling within the general place of supply rule. In such cases business customers who belong outside the UK will not be liable to UK VAT.

Airport lounges

To date HMRC has not regarded the supply of access to airport lounges as a land related service. However, this policy will change and therefore VAT, if applicable, will be due in the country where the aircraft lounge is located.

Changes of HMRC policy

Where businesses have been treating services in accordance with HMRC’s earlier policy, they may continue to apply that treatment for a transitional period of up to three months from the date of this Brief in order to make adjustments to their systems and processes. However, businesses that wish to adopt the new treatment may do so immediately if they wish.

Although businesses may make adjustments for past periods, any VAT declared in accordance with HMRC’s earlier policy, that would not have been due under the new interpretation, will not be entitled to a refund unless:

  • it can be demonstrated that the customer has not recovered the VAT charge
  • and any VAT repaid by HMRC will be refunded to the customer

If that is not the case then HMRC will consider the defence of unjust enrichment in deciding whether to make a repayment of the VAT declared.

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© Crown Copyright 2012.

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Article Published/Sorted/Amended on Scopulus 2012-08-06 13:58:50 in Tax Articles

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