The rewritten legislation regarding the VAT
treatment of land and property transactions includes new rules on
disapplying the option to tax and REEs.
HM Revenue & Customs (HMRC) has finally rewritten Schedule
10 of the VAT Act in relation to the treatment of land and property
transactions. The new legislation took effect on 1 June 2008, and
although many of the changes were made only to simplify the
language used, a number of important changes were made.
Beware the timing
One of the amendments relates to the rules regarding disapplying
the option to tax when the purchaser of a commercial building plans
to convert the building (or part of it) into residential
accommodation.
Since 1 June 2008, the purchaser has to provide the seller with
a form VAT 1614D in order for the option to tax to be removed. This
certifies that the building (or part of it) is to be used solely
for residential purposes. Disapplying the option may have an impact
on the seller's VAT
