a building, the option to tax will continue to apply to the land on which the building stood if the building is demolished and to any future buildings constructed on the land.Commonly, you will specify a ‘building’ because that is the prominent feature of the land. When you opt to tax, you can specify an area of land or a ‘building’. For the purposes of VAT, the term ‘land’ includes buildings. The scope of an option to tax 2.1 What you’re opting to tax The law detailing the option to tax is found in Schedule 10 to the Value Added Tax Act 1994. The area of VAT law which specifies the supplies of land and buildings that are exempt from VAT is Group 1 of Schedule 9 to the Value Added Tax Act 1994. an ‘interest in’ property means any interest in, right over or licence to occupy property.‘property’ means land (including buildings and civil engineering works).1.4 Note about terminology used in this notice You should read this notice if you make, or intend to make supplies of any interest in land, buildings or civil engineering works. Once you have opted to tax all the supplies you make of your interest in the land or buildings will normally be standard-rated, and you will normally be able to recover any VAT you incur in making those supplies. You do not need to own the land to opt to tax. For the purposes of VAT, the term ‘land’ includes any buildings or structures permanently affixed to it. This means that no VAT is payable, but the person making the supply cannot normally recover any of the VAT incurred on their own expenses.īut you can opt to tax land. Supplies of land and buildings, such as freehold sales, leasing or renting, are normally exempt from VAT. This notice assumes that you have a working knowledge of basic VAT principles as outlined in VAT guide (VAT Notice 700). You should also read Land and property (VAT Notice 742) which gives basic information about supplies of land. From 1 June 2008, it’s only referred to as the option to tax. Prior to 1 June 2008, the option to tax was also referred to as the election to waive exemption. It will tell you whether you need permission from HMRC before you can opt to tax, and how to notify HMRC of your decision.

This notice explains the effect of an option to tax and will help you to decide whether to exercise that option. Sections A to L also have text which has force of law. Some paragraphs in this notice have text which has force of law under Schedule 10 of the VAT Act 1994. Read Changes to notifying an option to tax land and buildings during coronavirus (COVID-19). We will continue to accept electronic signatures subject to certain conditions. The temporary change to the time limit for notifying an option ended on 31 July 2021. To help businesses during coronavirus (COVID-19) we made temporary changes to the time limit and how you notify an option to tax.

Xsection 7.7