Services directly connected with a specific property are taxed in the country where that property is, whoever the supplier and customer are and wherever they belong. The rule in paragraph 1 of Schedule 4A to the VAT Act 1994 overrides the general B2B and B2C rules. It catches construction, surveying, valuation, estate agency, conveyancing and accommodation, but not services where the property is only background, such as tax advice on rental income.

What does the property rule say?

Schedule 4A, paragraph 1, treats a supply of services connected with immovable property as made in the country where that property is situated. The services it covers are:

  • the grant, assignment or surrender of an interest in or right over property, or of a personal right to call for one;
  • licences to occupy and other contractual rights over property, including holiday accommodation, caravan pitches and camping facilities;
  • sleeping accommodation in a hotel, inn, boarding house or similar establishment, and rooms provided with it or for catering;
  • works of construction, demolition, conversion, reconstruction, alteration, enlargement, repair or maintenance of a building or civil engineering work;
  • services such as those of estate agents, auctioneers, architects, surveyors and engineers dealing with property.

VAT Notice 741A, paragraph 7.1, stresses the effect: the place of supply is where the property is located, irrespective of where you or your customer belong or whether the customer is in business. HMRC tells businesses in paragraph 6.1 to test the special rules like this one before falling back on the general rules described in our guide to the place of supply of services.

What counts as property for this rule?

Paragraph 7.2 of Notice 741A gives four limbs: any specific part of the earth, on, above or below its surface, over which title or possession can be created; any building or structure fixed to or in the ground that cannot easily be dismantled or moved; any item making up part of a building without which it is incomplete, such as doors, windows, roofs, staircases and lifts; and any item, equipment or machine permanently installed that cannot be moved without destroying or altering the building.

HMRC’s internal manual at VATPOSS07300 adds that fences, walls, growing crops and trees are included, as is plant that is an installation in its own right, such as a refinery. Machinery installed in a building other than as a fixture is normally goods. Fixed North Sea oil rigs within the 12 nautical mile limit are in the UK, and the Channel Tunnel is UK territory up to its mid point.

When is a service directly connected with a property?

Paragraph 7.3 limits the rule to services relating to a specific site, where the property is a central and essential part of the service, or where the service is intended to alter the property legally or physically. A service with only an indirect connection, or where the property element is incidental to a wider service, is outside the rule.

HMRC’s own example is an interior designer. Redesigning the decor of a particular hotel is property related; creating a corporate colour scheme for a hotel chain to use across its estate is not. A service covering several specific sites in different countries can still be property related, with an apportionment between the countries. The manual at VATPOSS07500 cites the tribunal decision in Daunter, where a solicitor’s litigation to secure title to a UK flat for a Jersey resident was held to be supplied in the UK because the property was central to the work.

Which services fall inside the rule?

Paragraph 7.4 and the manual at VATPOSS07600 give these examples, among others:

  • construction, demolition, maintenance, renovation, repair, cleaning and decorating of buildings and permanent structures;
  • surveying and valuing property, including valuations for insurance or loans, even if carried out remotely;
  • drawing up plans for a building designated for a particular site, and work to obtain planning consent for a specific site;
  • property management for the owner, including rent collection and arranging routine maintenance;
  • arranging the sale or lease of property, and conveyancing, title searches and due diligence on a specific property;
  • on site security, even if provided remotely;
  • a loss adjuster assessing a claim for damage to buildings;
  • hotel and holiday accommodation, car parking and a designated space in a warehouse;
  • plant and equipment supplied with an operator, where the supplier is responsible for executing the work.

Which services fall outside it?

Paragraph 7.5 and VATPOSS07700 list services that are only indirectly connected. These follow the general rules or another special rule instead:

Service Why it is outside
Accountancy or tax advice, including on rental income The property is background, not the subject
Management of a property investment portfolio Investment service, not tied to one site
Arranging hotel accommodation An intermediary service
Plans not tied to a particular site No specific property
Repair of free standing machinery Work on goods
Hire of plant without an operator A supply of hired goods
Insurance of property, market advice, feasibility studies Only indirectly related
Administering a deceased person’s estate that includes a house The property is incidental
Storage without a right to a specific area No exclusive use of a defined space

How are exhibition stands, installations and plant hire treated?

These are the borderline cases. Specific stand space at an exhibition supplied without related services is property related (paragraph 7.4). The manual at VATPOSS07600 adds that where the specific location is only allocated on arrival, the supply is taxed where the exhibition takes place under the event rules. Stand space sold as a package with design, security, power and telecommunications to help an exhibitor promote its products is outside the property rule (paragraph 7.5). Admission for visitors follows separate rules, explained in VAT on admission to events.

Paragraph 7.8 deals with installed goods. A contract to supply standard goods with installation ancillary to them is a supply of goods. Where bespoke design or adaptation makes the service dominant and the goods become a fixture that cannot easily be removed, it is a property related service.

Who accounts for the VAT?

For a UK property bought from an overseas supplier, paragraph 7.6 says a UK VAT registered customer belonging in the UK must apply the reverse charge, even if the supplier has a UK VAT registration. If the customer is not registered, or does not belong in the UK, the overseas supplier must register and account for UK VAT. Paragraph 2.6 confirms that a business not established in the UK has no registration threshold; see overseas businesses registering for UK VAT. Paragraph 5.1 adds that the reverse charge does not apply to property supplies that are taxable only because of an option to tax, so the overseas supplier registers.

For a UK business working on property abroad, the supply is outside the scope of UK VAT (paragraph 2.1), and paragraph 7.6 warns you may need to register in an EU member state where the property is. Paragraph 2.7 lets you recover related UK input tax where the supply would be taxable if made in the UK. Place of supply and liability are separate questions: the rate on UK work comes from Notice 708 and Notice 742, and UK construction work may also fall within the construction domestic reverse charge.

How does this work in practice?

Illustration only. A Bristol firm of chartered surveyors has three instructions in one month:

  1. Valuing a London office building for a fund based in New York. The customer is an overseas business, but the service is a valuation of a specific UK property, so the place of supply is the UK and UK VAT is due under the normal liability rules.
  2. Preparing a condition survey of a villa in Portugal for a UK private client. The property is in Portugal, so the supply is outside the scope of UK VAT, and the firm needs to look at Portuguese rules.
  3. Writing a general report on regional office rents for a UK investment company. This is market advice with only an indirect link to property, so the general B2B rule applies and the supply is made in the UK because that is where the customer belongs.

What mistakes are common?

  • Applying the B2B general rule to a valuation or survey for an overseas client when the property is in the UK.
  • Treating all work for property clients as property related, when advice, insurance and portfolio management are not.
  • Charging UK VAT to a UK business customer for overseas property work.
  • Overlooking that an overseas supplier with any UK property supplies to unregistered customers must register here.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.