Andrew Needham looks at a potentially tricky VAT issue.
When businesses opt to tax a property, there is often confusion as to what exactly is covered by the option and how far it extends.
Option to tax – the basics
Opting to tax a property turns an exempt supply into a taxable supply so you can recover the VAT on any building or refurbishment costs.
The option to tax only applies to land and commercial property and does not apply to residential property or to residential parts of a mixed-use property.
Opting to tax land
For VAT purposes, the term ‘land’ includes any buildings on that land, so if you opt to tax a piece of land it will include any building on it and any
