In Revenue & Customs Brief 67/09 (27 Oct 2009) HMRC has confirmed its application of the VAT exemption for property service charges which are levied as part of the conditions of the property lease.
The Brief follows the ruling of the ECJ in the Czech case of RLRE Telmer which concerned cleaning services for common areas of the building supplied by the landlord and whether or not the services were part of a single supply of the property lease or a separate taxable supply. In this case, the tenants were not required to obtain the services from the landlord but could choose to purchase them from a third party. The ECJ ruled that the services were not ancillery to the main supply of the lease and therefore standard rated.
HMRC believes that the ruling is consistent with the UK application of the exemption to service charges.
The Brief can be found on the HMRC newspage here http://www.hmrc.gov.uk/news/index.htm