Composite supply

Nature of agreement to buy a holiday home

F Ltd built and sold holiday homes on an estate that belonged to a third party. HMRC said when F Ltd entered into an agreement with a customer in connection with the construction of a lodge and its sale to the customer it made a composite supply of construction services and of the procurement that the landowner would grant to the customer a lease of the plot of land on which the lodge was to be built. F Ltd said the agreement provided for supplies of construction services only. These should be zero rated (VATA1994 Sch 8 group 5 Item 2).

The taxpayer’s appeal to the First-tier Tribunal was dismissed.

The Upper Tribunal reviewed the agreement and noted that it provided for the sale by F Ltd of a lodge. On completion of the property the customer was to...