Value Added Tax Act 1994, Schedule 10, paragraph 3

The option to tax

SCHEDULE 10 BUILDINGS AND LAND

3. (1) This paragraph explains for the purposes of this Part of this Schedule what is meant by a “relevant associate” in a case where a [F1803 person F1803] (“the opter”) exercises an option to tax in relation to any building or land.

(2)A [F1804 personF1804] is a relevant associate of the opter if under sections 43A to 43D (groups of companies) the [F1804 personF1804] —

(a)was treated as a member of the same group as the opter at the time when the option first had effect,

(b)has been so treated at any later time when the opter had a relevant interest in the building or land, or

(c)has been treated as a member of the same group as a [F1805 personF1805] within paragraph (a) or (b) of this sub-paragraph at a time when [F1806 that personF1806] had a relevant interest in the building or land.

(3) But a [F1807 person (“P”) F1807] ceases to be a relevant associate of the opter in relation to the building or land in the following circumstances.

(4)[F1808 PF1808] ceases to be a relevant associate of the opter in relation to the building or land at the time when all of the following conditions are first met—

(a)[F1809 PF1809] has no relevant interest in the building or land [F1810 ,

(aa)where [F1811 PF1811] has disposed of such an interest, it is not the case that a supply for the purposes of the charge to VAT in respect of the disposal—

(i)is yet to take place, or

(ii)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,F1810]

(b)[F1812 PF1812] or the opter is not treated under sections 43A to 43D as a member of the group mentioned above, and

(c)[F1813 PF1813] is not connected with any person who has a relevant interest in the building or land where that person is the opter or another relevant associate of the opter.

(5)[F1814 PF1814] also ceases to be a relevant associate of the opter in relation to the building or land if [F1814 PF1814] —

(a)meets conditions specified in a public notice (see paragraph 4), or

(b)gets the prior permission of the Commissioners (also, see that paragraph).

The time when [F1815 PF1815] ceases to be a relevant associate of the opter is determined in accordance with that paragraph.

(6) In this paragraph “relevant interest in the building or land” means an interest in, right over or licence to occupy the building or land (or any part of it).

Definitions used in Schedule 10, paragraph 3 7

tax

“tax” means VAT;

Defined in s.96(1) · see it in the full Act
building

(7) Sub-paragraphs (4) to (7) of paragraph 18 (meaning of “building”) apply for the purposes of this paragraph.

Defined in Sch.10 para.15A(7) · see it in the full Act

(5) Sub-paragraphs (4) to (6) of paragraph 18 (meaning of “building”) apply for the purposes of this paragraph as they apply for the purposes of that paragraph.

Defined in Sch.10 para.27(5) · see it in the full Act
company

(2B) In sub-paragraph (2A) “company” and “control” have the same meaning as in section 839 of the Taxes Act.

Defined in Sch.10 para.34(2B) · see it in the full Act
VAT

“VAT” means value added tax charged in accordance with this Act;

Defined in s.96(1) · see it in the full Act
connected

(a) a person is “connected” with a director if that person is the director's spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the director or of the director's spouse or civil partner;

Defined in Sch.9ZB para.17(8) · see it in the full Act

(5) Section 1122 of the Corporation Tax Act 2010 (“connected” persons) applies for the purpose of determining whether a person is connected with another for the purposes of this paragraph.

Defined in Sch.9ZA para.9(5) · see it in the full Act

(a) a person is “connected” with a director if that person is the director's spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the director or of the director's spouse or civil partner;

Defined in s.18A(4A) · see it in the full Act
permission

“permission” means written permission.

Defined in Sch.10 para.34(1) · see it in the full Act
the Commissioners

“the Commissioners” means the Commissioners of Customs and Excise;

Defined in s.96(1) · see it in the full Act

Cases considering Schedule 10, paragraph 3 6

ELS Group Ltd, R (on the application of) v HM Revenue and Customs

[2016] EWCA Civ 663 · 5 July 2016Interprets

The Schedule’s election-and-notification mechanism was contrasted with Business Brief 10/04. Its terms could retrospectively complete an earlier election, whereas the concession contained no equivalent language. (see paras [31]-[36])

Marlow Gardner & Cooke Ltd (Directors' Pension Scheme) v Revenue & Customs

[2006] EWHC 1612 (Ch) · 30 June 2006Interprets

Paragraph 3(1) was interpreted as making the election effective from the beginning of the day on which it was made, or a later specified day. That effective date applied once the notification requirement was satisfied. (see paras [8], [25]-[26]) Paragraph 3(6) was interpreted as imposing notification as a qualification on the election’s effect, while allowing notification within 30 days or such longer period as the Commissioners allowed. Read with paragraph 3(1), it produced retrospective effect from the election date. (see paras [8], [25]-[26])

Royal and Sun Alliance Insurance Group plc (Respondents) v. Her Majesty's Commissioners of Customs and Excise (Appellants).

[2003] UKHL 29 · 22 May 2003Limits

An election to waive exemption cannot generally operate retrospectively. The later election therefore did not change the exempt character of the earlier intended activity. (See Lord Walker, The Statutory Provisions.) An election to waive exemption is irrevocable. That feature explained the respondent's commercial decision to keep its options open while seeking tenants. (See Lord Hoffmann; Lord Walker, The Statutory Provisions.)

What each judgment says about Schedule 10, paragraph 3 is in the case-law panel in the full Act.

Amendments and notes

13 notes from legislation.gov.uk

Amendments

  1. F1803Word in Sch. 10 para. 3(1) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(a); S.I. 2019/1348, reg. 2
  2. F1804Word in Sch. 10 para. 3(2) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(b)(i); S.I. 2019/1348, reg. 2
  3. F1805Word in Sch. 10 para. 3(2)(c) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(b)(i); S.I. 2019/1348, reg. 2
  4. F1806Words in Sch. 10 para. 3(2)(c) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(b)(ii); S.I. 2019/1348, reg. 2
  5. F1807Words in Sch. 10 para. 3(3) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(c); S.I. 2019/1348, reg. 2
  6. F1808Word in Sch. 10 para. 3(4) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(d)(i); S.I. 2019/1348, reg. 2
  7. F1809Word in Sch. 10 para. 3(4)(a) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(d)(ii); S.I. 2019/1348, reg. 2
  8. F1810Words in Sch. 10 para. 3(4) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Value Added Tax (Buildings and Land) Order 2009 (S.I. 2009/1966), arts. 1(1), 3
  9. F1811Word in Sch. 10 para. 3(4)(aa) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(d)(ii); S.I. 2019/1348, reg. 2
  10. F1812Word in Sch. 10 para. 3(4)(b) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(d)(ii); S.I. 2019/1348, reg. 2
  11. F1813Word in Sch. 10 para. 3(4)(c) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(d)(ii); S.I. 2019/1348, reg. 2
  12. F1814Word in Sch. 10 para. 3(5) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(e)(i); S.I. 2019/1348, reg. 2
  13. F1815Word in Sch. 10 para. 3(5) substituted (1.11.2019) by Finance Act 2019 (c. 1), s. 53(2), Sch. 18 para. 15(2)(e)(ii); S.I. 2019/1348, reg. 2