Textual Amendments
F1Sch. 10 substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Value Added Tax (Buildings and Land) Order 2008 (S.I. 2008/1146), arts. 1(1), 2 (with Sch. 2)
12.(1)A supply is not, as a result of an option to tax, a taxable supply if—
(a)the grant giving rise to the supply was made by a person (“the grantor”) who was a developer of the land, and
(b)the exempt land test is met.
(2)The exempt land test is met if, at the time when the grant was made (or treated for the purposes of this paragraph as made), the relevant person intended or expected that the land—
(a)would become exempt land (whether immediately or eventually and whether or not as a result of the grant), or
(b)would continue, for a period at least, to be exempt land.
(3)“The relevant person” means—
(a)the grantor, or
(b)a development financier.
(4)For the meaning of a development financier, see paragraph 14.
(5)For the meaning of “exempt land”, see paragraphs 15 and 16.
(6)If a supply is made by a person other than the person who made the grant giving rise to it—
(a)the person making the supply is treated for the purposes of this paragraph as the person who made the grant giving rise to it, and
(b)the grant is treated for the purposes of this paragraph as made at the time when that person made the first supply arising from the grant.
(7)For a special rule in the case of a grant made on or after 19th March 1997 and before 10th March 1999, see paragraph 17.
(8)Nothing in this paragraph applies in relation to a supply arising from—
(a)a grant made before 26th November 1996, or
(b)a grant made on or after that date but before 30th November 1999, in pursuance of a written agreement entered into before 26th November 1996, on terms which (as terms for which provision was made by that agreement) were fixed before 26th November 1996.
13.(1)This paragraph applies for the purposes of paragraph 12.
(2)A grant made by any person (“the grantor”) in relation to any land is made by a developer of the land if—
(a)the land is, or was intended or expected to be, a relevant capital item (see sub-paragraphs (3) to (5)), and
(b)the grant is made at an eligible time as respects that capital item (see sub-paragraph (6)).
(3)The land is a relevant capital item if—
(a)the land, or
(b)the building or part of a building on the land,
is a capital item in relation to the grantor.
(4)The land was intended or expected to be a relevant capital item if the grantor, or a development financier, intended or expected that—
(a)the land, or
(b)a building or part of a building on, or to be constructed on, the land,
would become a capital item in relation to the grantor or any relevant transferee.
(5)A person is a relevant transferee if the person is someone to whom the land, building or part of a building was to be transferred—
(a)in the course of a supply, or
(b)in the course of a transfer of a business or part of a business as a going concern.
(6)A grant is made at an eligible time as respects a capital item if it is made before the end of the period provided in the relevant regulations for the making of adjustments relating to the deduction of input tax as respects the capital item.
(7)But if—
(a)a person other than the grantor is treated by paragraph 12(6) as making the grant of the land, and
(b)the grant is consequently treated as made at what would otherwise be an ineligible time,
the grant is treated instead as if were not made at an ineligible time.
(8)In this paragraph a “capital item”, in relation to any person, means an asset falling, in relation to the person, to be treated as a capital item for the purposes of the relevant regulations.
(9)In this paragraph “the relevant regulations”, as respects any item, means regulations under section 26(3) and (4) providing for adjustments relating to the deduction of input tax to be made as respects that item.
14.(1)This paragraph explains for the purposes of paragraphs 12 to 17 what is meant, in relation to the grantor of any land, by a development financier.
(2)A “development financier” means a person who—
(a)has provided finance for the grantor’s development of the land, or
(b)has entered into any arrangement to provide finance for the grantor’s development of the land,
with the intention or in the expectation that the land will become exempt land or continue (for a period at least) to be exempt land.
(3)For the purposes of this paragraph references to finance being provided for the grantor’s development of the land are to doing (directly or indirectly) any one or more of the following—
(a)providing funds for meeting the whole or any part of the cost of the grantor’s development of the land,
(b)procuring the provision of such funds by another,
(c)providing funds for discharging (in whole or in part) any liability that has been or may be incurred by any person for or in connection with the raising of funds to meet the cost of the grantor’s development of the land, and
(d)procuring that any such liability is or will be discharged (in whole or in part) by another.
(4)For the purposes of this paragraph references to providing funds for a particular purpose are to—
(a)the making of a loan of funds that are or are to be used for that purpose,
(b)the provision of any guarantee or other security in relation to such a loan,
(c)the provision of any of the consideration for the issue of any shares or other securities issued wholly or partly for raising those funds,
(d)the provision of any consideration for the acquisition by any person of any shares or other securities issued wholly or partly for raising those funds, or
(e)any other transfer of assets or value as a consequence of which any of those funds are made available for that purpose.
(5)For the purposes of this paragraph references to the grantor’s development of the land are to the acquisition by the grantor of the asset which—
(a)consists in the land or a building or part of a building on the land, and
(b)is, or (as the case may be) was intended or expected to be, a relevant capital item in relation to the grantor (within the meaning of paragraph 13).
(6)For this purpose the reference to the acquisition of the asset includes—
(a)its construction or reconstruction, and
(b)the carrying out in relation to it of any other works by reference to which it is, or was intended or expected to be, a relevant capital item (within the meaning of paragraph 13).
(7)In this paragraph “arrangement” means any agreement, arrangement or understanding (whether or not legally enforceable).
15.(1)This paragraph explains for the purposes of paragraphs 12 to 17 what is meant by exempt land.
(2)Land is exempt land if, at any time before the end of the relevant adjustment period as respects that land—
(a)a relevant person is in occupation of the land, and
(b)that occupation is not wholly, or substantially wholly, for eligible purposes.
(3)Each of the following is a relevant person—
(a)the grantor,
(b)a person connected with the grantor,
(c)a development financier, and
(d)a person connected with a development financier.
[F2(3A)Where a person (“P”) is in occupation of the land at any time before the end of the relevant adjustment period as respects that land, P is treated for the purposes of sub-paragraph (2) as not in occupation of the land at that time if—
(a)the building occupation conditions are met at that time, or
(b)P’s occupation of the land arises solely by reference to any automatic teller machine of P.]
(4)The relevant adjustment period as respects any land is the period provided in the relevant regulations (within the meaning of paragraph 13) for the making of adjustments relating to the deduction of input tax as respects the land.
(5)For the purposes of this paragraph any question whether a person’s occupation of any land is “wholly, or substantially wholly,” for eligible purposes is to be decided by reference to criteria specified in a public notice.
Textual Amendments
F2Sch. 10 para. 15(3A) substituted (with effect in accordance with art. 2 of the amending S.I.) by The Value Added Tax (Buildings and Land) Order 2011 (S.I. 2011/86), arts. 1, 5
[F315A.(1)For the purposes of paragraph 15(3A), the building occupation conditions are met at any time (“the time in question”) if—
(a)the grant consists of or includes the grant of a relevant interest in a building, and
(b)P does not, at the time in question, occupy—
(i)any part of the land that is not a building, or
(ii)more than [F4the maximum allowable percentage] of any relevant building.
(2)For the purposes of sub-paragraph (1)(b)(i) and (ii) occupation by a person connected with P is treated as occupation by P [F5if that occupation is not wholly, or substantially wholly, for eligible purposes.]
(3)For the purposes of sub-paragraph (1)(b)(i) occupation by a person of—
(a)land used for the parking of cars or other vehicles, or
(b)land that is within the curtilage of a building,
is disregarded if the occupation is ancillary to the occupation by that person of a building.
[F6(4)In sub-paragraph (1)(b)(ii)—
“the maximum allowable percentage” means—
2% where P is the grantor or a person connected with the grantor, and
10% where P is a development financier or a person connected with a development financier (but not also the grantor or a person connected with the grantor), and
“relevant building”—
means a building any relevant interest in which is included in the grant, other than any part of such a building in which, immediately before the grant, neither the grantor nor any person connected with the grantor held a relevant interest, but
does not include any building P’s occupation of which arises solely by reference to any automatic teller machine of P.]
(5)The way in which occupation by a person of a building is measured for the purposes of sub-paragraph (1)(b)(ii) is to be determined in accordance with conditions specified in a public notice.
(6)In this paragraph “relevant interest”, in relation to a building or part of a building, means any interest in, right over or licence to occupy the building or part.
[F7(6A)Sub-paragraph (5) of paragraph 15 (determination of whether occupation “wholly, or substantially wholly” for eligible purposes to be by reference to criteria in public notice) applies for the purposes of this paragraph.]
(7)Sub-paragraphs (4) to (7) of paragraph 18 (meaning of “building”) apply for the purposes of this paragraph.]
Textual Amendments
F3Sch. 10 para. 15A inserted (with effect in accordance with art. 2 of the amending S.I.) by The Value Added Tax (Buildings and Land) Order 2010 (S.I. 2010/485), arts. 1, 6
F4Words in Sch. 10 para. 15A(1)(b)(ii) substituted (with effect in accordance with art. 2 of the amending S.I.) by The Value Added Tax (Buildings and Land) Order 2011 (S.I. 2011/86), arts. 1, 6(a)
F5Words in Sch. 10 para. 15A(2) inserted (with effect in accordance with art. 2 of the amending S.I.) by The Value Added Tax (Buildings and Land) Order 2011 (S.I. 2011/86), arts. 1, 6(b)
F6Sch. 10 para. 15A(4) substituted (with effect in accordance with art. 2 of the amending S.I.) by The Value Added Tax (Buildings and Land) Order 2011 (S.I. 2011/86), arts. 1, 6(c)
F7Sch. 10 para. 15A(6A) inserted (with effect in accordance with art. 2 of the amending S.I.) by The Value Added Tax (Buildings and Land) Order 2011 (S.I. 2011/86), arts. 1, 6(d)
16.(1)This paragraph explains what is meant for the purposes of paragraph 15 by a person occupying land for eligible purposes.
(2)A person cannot occupy land at any time for eligible purposes unless the person is a taxable person at that time (but this rule is qualified by sub-paragraphs (5) and (6)).
(3)A taxable person occupies land for eligible purposes so far as the occupation is for the purpose of making creditable supplies (but this rule is qualified by sub-paragraphs (5) to (7)).
(4)“Creditable supplies” means supplies which—
(a)are or are to be made in the course or furtherance of a business carried on by the person, and
(b)are supplies of such a description that the person would be entitled to a credit for any input tax wholly attributable to those supplies.
(5)Any occupation of land by a body to which section 33 applies (local authorities etc) is occupation of the land for eligible purposes so far as the occupation is for purposes other than those of a business carried on by the body.
(6)Any occupation of land by a Government department (within the meaning of section 41) is occupation of the land for eligible purposes.
F8(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8)If a person occupying land—
(a)holds the land in order to put it to use for particular purposes, and
(b)does not occupy it for any other purpose,
the person is treated for the purposes of this paragraph, for so long as the conditions in paragraphs (a) and (b) continue to be met, as occupying the land for the purposes for which the person proposes to use it.
(9)If land is in the occupation of a person (“A”) who—
(a)is not a taxable person, but
(b)is a person whose supplies are treated for the purposes of this Act as made by another person (“B”) who is a taxable person,
the land is treated for the purposes of this paragraph as if A and B were a single taxable person.
(10)For the purposes of this paragraph a person occupies land—
(a)whether the person occupies it alone or together with one or more other persons, and
(b)whether the person occupies all of the land or only part of it.
Textual Amendments
F8Sch. 10 para. 16(7) omitted (with effect in accordance with art. 2 of the amending S.I.) by virtue of The Value Added Tax (Buildings and Land) Order 2011 (S.I. 2011/86), arts. 1, 7
17.(1)A grant in relation to land which was made—
(a)on or after 19th March 1997, and
(b)before 10th March 1999,
is treated for the purposes of paragraph 12 as made on 10th March 1999 if, at the time of the grant, the capital item test was met.
(2)The capital item test was met if the person making the grant, or a development financier, intended or expected that—
(a)the land, or
(b)a building or part of a building on, or to be constructed on, the land,
would become a capital item in relation to the grantor or any relevant transferee but it had not become such an item.
(3)For the purposes of that test “capital item” and “relevant transferee” have the meaning given by paragraph 13.]