The option to tax land and buildings
Produced in partnership with Martin Scammell
The option to tax land and buildings

The following Tax practice note Produced in partnership with Martin Scammell provides comprehensive and up to date legal information covering:

  • The option to tax land and buildings
  • Why does this matter?
  • Where is the option relevant?
  • Terminology
  • Legislation
  • The person opting
  • VAT groups
  • Partnerships and trusts
  • Death and insolvency
  • The scope of the option
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for Tax?

This Practice Note is about the option to tax land and buildings. It considers the person by whom the option is exercised, the scope of the option, the exercise and notification of the option, its various implications, the circumstances where it can be revoked and the advantages and disadvantages of opting.

For cases where the option is specifically disapplied, see Practice Notes: Option to tax—disapplication for residential and other property and Option to tax—disapplication under anti-avoidance rules.

Why does this matter?

The default position is that property transactions are VAT-exempt (see Practice Note: Exemption from VAT for land and buildings), so that no VAT is charged and related input tax cannot be recovered. The option generally means that transactions become taxable and input tax becomes recoverable. In practice, most commercial properties are subject to an option to tax.

In principle, if the owner of a

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