Quarry payments

[shotokan]

A client company leases a quarry to another business and they receive payment in the form of a royalty based on how much is put in and taken out of the quarry. Does anyone know what the VAT position is on the payments that they receive?

All comments are appreciated.

[Eamon McNicholas]

The basic position is that the grant of a right over land such as the right to quarry or extract minerals, technically a profit a prendre, is exempt under VAT Act 1994 sch.9 grp.1 item 1. See also HMRC's VAT Notice 742 "Land & Property" para.2.4.

But, being land it may be subject to anti-avoidance provisions and ensuring there has not been an option to tax (waive exemption).

Eamon Mc Nicholas
Tax Barrister

www.EamonMcNicholas.com

[The above is not to be taken nor used as specific advice]

[Eamon McNicholas]

The question is not clear on what is "put in" to the quarry, but if there are deposits then this raises the issue of landfill tax.

Eamon Mc Nicholas
Tax Barrister

www.EamonMcNicholas.com

[The above is not to be taken nor used as specific advice]