Graham Elliott, VAT expert at City & Cambridge Consultancy unpicks anti-avoidance legislation in PGPH VAT case, treatment of barter of goods in Storer case, notice 742A on opting to tax updated
Case of Weasel words in PGPH decision
The terms of the anti-avoidance legislation relating to the option to tax over land and property, contained in paragraphs 12 – 17 of Schedule 10, Value Added Tax Act 1994 (VATA 1994), are notorious for their opacity and counter-intuitive impacts. The tribunal decision in PGPH Limited (TC06189) bears this out.
The provisions bite when the ‘developer’ who is to make the relevant grant of opted land ‘intends’ or ‘expects’ the land to be ‘exempt land’. Part of the definition of ‘exempt land’ is that it falls within the capital goods scheme. That requires the land to be improved with expenditure of £250,000 of taxable services, or more. The natural reading of this, and in most cases the actual outcome, is that the property must receive that level of spend or the provisions will not bite. If the provisions do not bite, the option to tax does apply.
But the weasel wor
