Value Added Tax Act 1994 Schedule 10 paragraph 1

Introduction

Paragraph 1 of Schedule 10 provides an overview of the option to tax land, explaining its effect, the exclusions that apply, and the administrative rules governing its use.

• The option to tax converts what would otherwise be exempt supplies of land into taxable supplies, enabling the person opting to recover input VAT on related costs.
• Several categories of grant are excluded from the option to tax, including those relating to dwellings, charitable use, residential caravans and houseboats, relevant housing associations, and grants to individuals for constructing dwellings.
• Anti-avoidance provisions prevent certain developers of land from benefiting from the option to tax in respect of particular supplies arising from their grants.
• Further rules cover the scope and effective date of the option, notification requirements, elections for subsequently acquired land, revocation of the option, its effect on new buildings, and the need for prior permission where exempt grants were made before the option was exercised.