In Places for People Homes Ltd v HMRC [2025] TC09695, the First Tier Tribunal (FTT) found that supplies of premises maintenance services made by flat maintenance trust companies were not exempt supplies of land.
Places for People Homes Ltd (PPH) was the principal member of a VAT group that included various Maintenance Trust Companies (MTCs).
- Flat lessees made periodic payments known as maintenance contributions to the MTCs in respect of the cost of providing maintenance services for communal areas and grounds.
- Each MTC took its own fee for acting as MTC out of the maintenance contributions and contributed the balance to a maintenance trust, of which the MTC was trustee.
- The lessors of the flats were third parties who were not members of PPH’s VAT group and were not part of the appeal.
- The costs incurred by the MTC in maintaining the property were withdrawn from the maintenance trust fund.
- These costs included fees charged by the management company to whom tasks of management were sub-contracted by the MTCs; direct salary costs of staff employed by each MTC itself, such as porters or caretakers; and other costs such as fees charged by third-party garden maintenance businesses.
- The MTCs did not charge VAT on the maintenance contributions. HMRC assessed for output VAT totalling £712,794.
- PPH Appealed to the First Tier Tribunal (FTT), arguing that the maintenance contributions should be characterised as consideration for the Supply of residential land and therefore exempt from VAT.
- PPH’s argument for exempting the maintenance contributions was that if a lease provides for payment of both maintenance contributions and rent directly to the landlord, HMRC treats the corresponding supplies as being exempt Composite supplies.
- The main issue in this appeal was whether two suppliers (the lessor and the MTC) could together make supplies which were treated for VAT purposes as a single exempt composite supply of land.
Item 1, Group 1, Schedule 9, VATA 1994 provides for ‘the grant of any interest in or right over land or of any licence to occupy land’ to be VAT-exempt.
The FTT found that:
- The MTCs’ supply of maintenance services was made to the lessors and not to the lessees.
- Supplies by the MTCs did not form a part of a single supply of land by the lessor to the lessees.
- The MTC’s supplies were not ancillary to the lessors’ supply of land and could not take on the character of an exempt supply of land.
The appeal was dismissed.
Useful guides on this topic
Mixed supplies: Single or Multiple supply?
Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?
Land & Property VAT (Subscriber guide)
An outline of the VAT treatment of some of the more common supplies of land and property.
Groups (VAT)
What are the conditions for forming a VAT group? What rules apply once a VAT group is in place?
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