The Value Added Tax (Buildings and Land) Order 2009

EXPLANATORY NOTE

(This note is not part of the Order)

This Order, which comes into force on 1st August 2009, amends Schedule 10 (“the Schedule”) to the Value Added Tax Act 1994 (c. 23) (“the Act”) in relation to supplies made on or after that day.

Article 3 amends paragraph 3(4)(a) of the Schedule and inserts paragraph 3(4)(aa). The conditions which must be met in order for a body corporate to cease to be a relevant associate of an opter are amended. The requirement that no consideration remains unpaid in respect of a disposal of a relevant interest in the building or land concerned is replaced by the requirement that no supply for the purposes of the charge to VAT in respect of the disposal is yet to take place or would be yet to do so if one or more conditions were to be met.

Article 4 amends paragraph 21 of the Schedule by inserting new sub-paragraphs (13) and (14). Sub-paragraph (13) provides that the time when a relevant interest is treated as acquired for the purposes of the paragraph is the time at which a supply is treated as taking place for the purposes of the charge to VAT in respect of the acquisition and, if there is more than one such time, the acquisition is treated as taking place at the earliest of those times. Sub-paragraph (14) provides that sub-paragraph 13 has effect to determine the time of an acquisition even though the supply in question falls to be treated as neither a supply of goods nor services by virtue of an order under section 5(3)(c) of the Act.

Article 5 amends paragraph 25(6)(b) and (7) and substitutes paragraph 25(8) so that where an option is revoked pursuant to permission given by them, the Commissioners for Her Majesty’s Revenue and Customs (“the Commissioners”) may specify the day or time from which the revocation has effect and may specify that day or time by reference to the happening of an event or the meeting of a condition.

Article 6 substitutes paragraph 26 of the Schedule. Paragraph 26(1) provides that the revocation of an option to tax pursuant to paragraph 22(2) and (3) of Schedule 10 upon the making of a real estate election pursuant to paragraph 21 of that Schedule will not occur where condition A or B contained in paragraph 26(3) and (4) are met. Paragraph 26(2) provides that revocation of an option pursuant to paragraph 24 after 6 years have elapsed since an opter held a relevant interest in the land or building subject to the option does not occur where condition A or B or the condition C contained in paragraph 26(6) are met.

Article 7 inserts paragraph 27(4)(za) and substitutes paragraph 27(4)(b) of the Schedule to require that the notification by an opter of the exclusion of a new building from the effect of an option must, in addition to the other requirements of that paragraph, state the time from which the exclusion from the option has effect and be given to the Commissioners before the end of the period of 30 days beginning on the day on which the exclusion has effect or such longer period as the Commissioners allow.

Article 8 amends paragraph 34(2) of the Schedule and inserts paragraph 34(2A) and (2B) so that, when applying section 839 of the Income and Corporation Tax Act 1988 (c. 1), a company is not connected with another company for the purposes of Part 1 of the Schedule only because both are under the control of the Crown, a Minister of the Crown, a government department or a Northern Ireland Department.

A full and final Impact Assessment has not been produced for this instrument as a negligible impact on the private or voluntary sectors is foreseen.