294. Commercial leases.

Commercial leases are normally treated as giving rise to exempt supplies by the landlord to the tenant, and no value added tax (VAT)1 will be payable on the premium or rent unless the landlord has exercised his option to tax in respect of the building on or before completion or before rent is paid (or invoiced if earlier)2. If the landlord exercises that option, he must account to Her Majesty's Revenue and Customs3