This article reviews a recent case illustrating some practical problems for VAT advisers about the treatment of certain transactions that involve land and property in the UK.

In Matthews [2016] TC 05426, the First Tier Tribunal (FTT) allowed the appeal against HMRC’s decision to apportion a public house two-thirds to commercial use and one-third to residential use.

On 2 June 2011, Matthews purchased the long leasehold of a disused public house (the property) with a tenant on a five-year lease. On 10 June 2011, Matthews sent HMRC a notification opting to tax the property. The notification treated the effective date of the option to tax as 9 June 2011.