If a business buys a commercial property on which the seller has opted to tax (OTT), with the intention of converting it into a dwelling(s) or for a relevant residential purpose, such as student accommodation, then the buyer can issue a certificate (VAT 1614D) to the seller to make the sale VAT exempt rather than standard rated.

There are several advantages of issuing a VAT1614D. If a business intends to make onward exempt supplies then the VAT, which would not be recoverable, is not incurred.

Even if the input tax could be recovered, the VAT 1614D facilitates cashflow because the VAT does not have to be paid to the seller and recovered from HMRC on a subsequent VAT return.