Commentary

RCB/50/10 Proposed changes to the option to tax for supplies of land and buildings (anti-avoidance rule). The introduction of a new “2 per cent occupation rule”

Part V16 Forms and other HMRC material

RCB/50/10 Proposed changes to the option to tax for supplies of land and buildings (anti-avoidance rule). The introduction of a new “2 per cent occupation rule”

RCB/50/10 Proposed changes to the option to tax for supplies of land and buildings (anti-avoidance rule). The introduction of a new “2 per cent occupation rule”

Revenue & Customs Brief, Issue 50. 6 December 2010

Introduction

This Brief announces a four week consultation on draft legislation (see Annex A – not reproduced here, see http://www.hmrc.gov.uk/briefs/vat/5010-annexa.pdf) which seeks to amend part of the option to tax anti-avoidance test for supplies of land & buildings contained in VATA 1994 Schedule 10 paras 12 to 17. This Brief explains the proposed changes and invites comments. Subject to the consultation it is intended that the changes will be introduced in early 2011.

Who needs to read this?

Anyone who makes supplies of land and buildings which are subject to the anti-avoidance rule in VATA 1994 Schedule 10 paragraphs 12 to 17. See Notice 742A “Opting to tax land and buildings” (Part V8) section 13 for details about how the rule works and transactions that are likely to be affected.

Background

Under the anti-avoidance provision in Schedule 10 of VATA 1994, an option to tax is disapplied where two key tests are satisfied:

  1.  

    —     the grantor is a developer of the land

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