Novation land rights

There has been some surprise expressed about the decision of the First Tier Tribunal (FTT) in Hanuman Commercial Limited (TC06249), concerning the VAT liability of a transaction involving the novation of a contract for the sale of a property.

The circumstances involved a company acquiring an interest via a contract to buy a property. It decided to sell these rights in such a manner that the property sale would be made direct from its owner to an ultimate purchaser. The seller of those rights effected this by novating the contract to the ultimate purchaser. It thought that this was the supply of a right over land and therefore exempt (as it had not opted to tax).