Value Added Tax Act 1994 section Schedule 10 paragraphs 18–30

Scope of the option to tax land and buildings, its duration, notification, real estate elections, revocation and prior permission requirements

Section Schedule 10 paragraphs 18–30 set out the rules governing how the option to tax applies to land and buildings, when it takes effect, how it must be notified, how real estate elections work, and the circumstances in which an option may be revoked or requires prior permission.

• An option to tax covers the specific land or building identified, and if exercised on a building (or part of one), it extends to the whole building and its surrounding land; buildings linked internally or by a private covered walkway are generally treated as one building unless the link was created after completion.
• The option takes effect from the day it is exercised (or a later specified day), must be notified to HMRC within 30 days, and can be revoked within a six-month cooling-off period provided no VAT has been charged and no transfer of a going concern has occurred; it also lapses automatically after six continuous years without a relevant interest, or may be revoked after 20 years.
• A real estate election allows a person to automatically opt to tax any building or land they (or a group member) acquire in the future, removing the need to opt individually each time; HMRC must be notified within 30 days, and existing options on land no longer held may be treated as revoked or converted into separate options for different parcels.
• Where an exempt supply relating to the land has been made (or is intended) within the 10 years before the option is to take effect, the option can only be exercised if published conditions are met or HMRC gives prior permission, which requires a fair and reasonable attribution of input tax to future taxable supplies.

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