RCB/3/11 VAT—changes to the option to tax for supplies of land and buildings (anti-avoidance rule)
Revenue & Customs Brief, Issue 3. 25 January 2011
The introduction of a new “2 per cent occupation rule” and a change to the way that occupation by reference to Automatic Teller Machines is treated. See The Value Added Tax (Buildings and Land) Order 2011 (SI 86/2011).
This Brief explains minor changes which are being made to the option to tax anti-avoidance rule. Currently the option to tax is disapplied where the grantor, or a person connected to the grantor, is in exempt occupation of the land (and the other conditions in the anti-avoidance rule are met). The changes to be introduced from 1 March 2011 mean that an option to tax will no longer be disapplied where the grantor or persons connected with the grantor only occupy minor parts of buildings (no more than 2 per cent) even if the other conditions of the anti-avoidance rule are met.
The treatment of Automatic Teller Machines (ATMs) is also being amended. From 1 March 2011 occupation of any building which is solely by way of ATMs will not be treated as occupation for the purposes of the anti-avoidance test.
2 Who needs to read this?
Anyone who makes supplies of land and buildings which are subject to the anti-avoidance rule in VATA 1994 Sch 10 paras 12 to 17. See Notice 742A “Opting to tax land and buildings” section 13 for (Part V8) details