The Value Added Tax (Buildings and Land) Order 1999

Explanatory Note

(This note is not part of the Order)

This Order amends Schedule 10 (Buildings and Land) to the Value Added Tax Act 1994 with effect from 10th March 1999 so as to extend the scope of the anti-avoidance restriction in paragraph 2(3AA) on use of the election to waive exemption. The restriction now extends to a development of land which will result in a capital item for the purpose of the Capital Goods Scheme as well as land or buildings which are already capital items. The Order does not, however, affect any grant of an interest in, right over or licence to occupy land made before 26th November 1996 or one made before 30th November 1999 if made pursuant to an agreement in writing entered into before 26th November 1996 which fixed the terms of the grant (a relevant pre-commencement grant within the meaning of section 37 of the Finance Act 1997).

Article 4 inserts a new paragraph 2(3AAA) into Schedule 10. For the purposes of the restriction in paragraph 2(3AA), where the grant of an interest in, right over or licence to occupy land took place between 19th March 1997 and 9th March 1999 it is deemed also to have taken place on 10th March 1999 if at the time of the grant the land in question was not a capital item, but the person making the grant or the person providing finance to the grantor expected that it would become a capital item either for the grantor or for any person to whom the property is transferred. As a result of this amendment any election to waive exemption will not apply to supplies arising from such a grant, made on or after 10th March 1999.

Article 5 amends paragraph 3A(2) which defines what developments are within the scope of paragraph 2(3AA). Land, a building or a part of a building is now within the scope of paragraph 2(3AA) if it is a capital item within the Capital Goods Scheme or if the grantor or the person financing the grantor intends that it will become one, and the grant of an interest in, right over or licence to occupy the property takes place before the expiry of the ten year period over which the Capital Goods Scheme runs.

Article 5 also makes consequential amendments to paragraph 3A(3), 3A(6) and 3A(7) of Schedule 10.