Supply of land or supply of services

Supply of land or supply of services

My client has a field where he allows people to walk their dogs. He charges them for the use of the field as a safe and secure dog-walking area and is promoting it as such. Should he be accounting for VAT on that charge?He is considering adding a refreshment area to supply drinks etc to the walkers. He is also thinking of building ramps and other facilities akin to ‘dog agility’ structures, (to make it more interesting for the dogs) and providing agility and basic behaviour training sessions.


The question here is whether there is a granting of a licence to occupy land or the provision of services. The former would be exempt from VAT (subject to an option to tax being exercised), whilst the latter will be taxable.

It is necessary to consider more detail as to the exact nature of, ‘admittance to the field to walk a dog’. In this instance, the dog-walker is given a time slot to enter the field and have exclusive use. There are free ‘poo-bags’ provided and there is a tap where water bowls can be filled. There are no other services provided; the landowner offers nothing else other than the key to the gate. The dog walker has exclusive use of the field for an hour.

A ‘licence to occupy’ may fall short of a formal interest or right over land (e.g. a tenancy agreement) but may still have the characteristics of ‘leasing or letting of immoveable property’ – VATLP05700 refers here

In order for a supply of land to be considered a ‘licence to occupy’, there must be no more than a ‘passive act’ of supplying ‘exclusive use of immoveable property’.  In the circumstances above, the dog walker only gets access to the space but has exclusive access for the time period they are there. The provision of a water supply and the bags would not be seen as removing the passivity of the landowner’s actions; they are factors providing for ‘better enjoyment’ of the use of the field. There is no additional charge and no additional human involvement. The supply as it stands would therefore indeed be a ‘licence to occupy’ and exempt from VAT as per VAT Act 1994 Schedule 9 Group 1.

Changes being considered

If these additional elements were included in a single admission charge, this would change the character of the supply. It would no longer be a passive supply of land. The admission would be to a ‘dog exercising, agility and training facility’. There is potentially additional human involvement as well as the provision of services akin to a designated park or play area. The admission fee is for more than a use of land; it is to use the services available therein. The additional services provided alter the nature of the supply making it a standard rated supply of services to which the use of ‘space’ is incidental.

The key in establishing the liability to VAT of land supplies is to consider

  • Exclusive use
  • Designated area of land/space
  • Passivity of actions by supplier.

The land exemption is currently the subject of review by HMRC and submissions from industry have already been made in response to HMRCs questions regarding the complexity of the exemption and the related Option to Tax regulations. There may be changes in the pipeline, but land remains a very common subject of query.

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