Property transactions where the business cannot opt to tax

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Property transactions where the business cannot opt to tax
  • What property transactions are not subject to the option to tax?
  • Dwellings
  • Relevant residential purpose
  • Relevant intermediaries
  • Relevant charitable purpose
  • Relevant housing association
  • Land used to construct a dwelling
  • Pitches for residential caravans and moorings for houseboats
  • Mixed use properties

What property transactions are not subject to the option to tax?

The table below provides an overview of the types of property transaction where the business is not entitled to opt to tax. If it does opt to tax, the supply will remain exempt from VAT because the option to tax will not be valid.

Value Added tax (buildings and Land) Order, SI 2008/1146 (subscription sensitive); VATA 1994, Sch 10; Notice 742A ; VATLP22300; De Voil Indirect Tax Service V7.385 (subscription sensitive)

It should also be noted that HMRC have also introduced some anti-avoidance provisions which 'disapply' the option to tax in certain situations. Further information on the disapplication of the option to tax under the anti-avoidance provisions can be found in the Disapplication of the option to tax - anti avoidance provisions guidance note.

Type of property transactionCertificate required?
Buildings designed or adapted and intended for use as a dwellingNo certificate is required. It would be prudent for the business to keep evidence of the intended use of the property to support the fact that the option to tax is not applicable to the transaction.
Buildings designed or adapted and intended for use as a relevant residential purposeNo certificate is required. The

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