Direct or Indirect Land Related services – Form LL Restriction Overseas client

[Andy Morris]

Morning all,

Our client is overseas and has a Form LL Restriction on a UK property that they jointly own with their sister. A different firm acts for the same client in transferring the property from joint names solely to the sister.

We are only instructed to produce the certificate to comply with the Form LL restriction.

Our question is whether our service is directly or indirectly related to land to determine whether VAT is charged or not to our overseas client?

We are leaning towards indirectly related, as our service is essentially ID verification, we are certifying that we are satisfied the client is the same person as the proprietor on the title. However I do see an argument that the essential element is the UK property that the title and Form LL restriction relates to, our supply is ascertaining that our client is entitled to dispose of the UK property which is where the final service is supplied.

Thanks

Andy

[Tanya Mills]

Hi – my view is indirect but I am not the expert! Pasting the definition we work with when assessing this:

Direct means a service which directly relates to a specific site of land or buildings (i.e. the service derives from the land or buildings and this forms a central and essential part of the service being performed) – this would include legal services such as conveyancing, drawing up contracts of sale / lease, and due diligence on specific property.

HMRC’s guidance section 7 of HMRC’s VAT Notice 741A sets out its interpretation of ‘land related’, including some helpful examples.

[Andy Morris]

Hi Tanya,

Yes that’s the notice we were checking. I did consider whether the inclusion of “Legal services… including title searches and other due diligence on a specific property” would encompass certifying compliance with the restriction on the title or not.

The example of indirectly related is “general legal advice on contractual terms” which is a bit vague!

Thanks

[Author]

Posts