ABSTRACT
Generally, where land and buildings are concerned, the starting point is that any supply is VAT exempt. There are two main exceptions to this rule where VAT is chargeable. First, the freehold sale of new commercial buildings, where the liability to VAT extends from the date building works are commenced until either three years after practical completion or the first full year of occupation. Secondly, where the owner of a non-residential property ‘opts to tax’. Following the election, the owner must charge VAT on any rents and the sale pr ice of the property. On a purchase of commercial property, the intention to charge VAT is often referred to in the special conditions of the contract. A prospective tenant should also check the landlord's replies to preliminary enquiries to see whether VAT will be chargeable on the rent.
