Introduction
Conditions For Option To Tax
- The Conditions are listed below:
Condition One – The Relevant Interest Condition
- Neither the taxpayer nor any relevant associate connected with the taxpayer has a relevant interest in the building or land at the time when the option is revoked, and
- if the taxpayer or a relevant associate of the taxpayer has disposed of such an interest, no supply for the purpose of the charge to VAT in respect of the disposal –
- is yet to take place, or
- would be yet to take place if one or more conditions (such as the happening of an event or the doing of an act) were to be met.
Condition Two – The Twenty Year Condition
- The taxpayer or a relevant associate connected with the taxpayer held a relevant interest in the building or land:
- after the time from which the option had effect, and
- more than 20 years before the option is revoked.
Condition Three – The Capital Item Condition
- Any land or building that is subject to the option at the time when it is revoked does not fall, in relation to the taxpayer or a
- relevant associate connected with the taxpayer,
- for input tax adjustment as a capital item under part 15 of the Value Added Tax Regulations 1995 (adjustments to the deduction of input tax on capital items).
Condition Four – The Valuation Condition
- Neither the taxpayer nor any relevant associate connected to the taxpayer has made a supply of a relevant interest in the building or land subject to the option in the 10 years immediately before revocation of the option that:
- Was for a consideration that was less than the open market value of that supply, or
- Arose from a relevant grant.
Condition Five – The Pre-Payment Condition
- No part of a supply of goods or services made for consideration to the taxpayer or a relevant associate connected with the taxpayer before the option is revoked will be attributable to a supply or other use of the land or buildings by the taxpayer more than 12 months after the option is revoked.