The Value Added Tax (Buildings and Land) Order 1995

Explanatory Note

(This note is not part of the Order)

This Order amends Schedule 10 (Buildings and Land) to the Value Added Tax Act 1994 with effect from 1st March 1995.

• Article 3(a) adds two further categories of property transaction specified in paragraph 2(2) which cannot be taxed under an election to waive exemption. These are a pitch for a residential caravan and the facilities for mooring a residential houseboat. Article 4(c) adds a new paragraph 3(7A) which further defines what is meant by a residential houseboat; article 9(a) incorporates the definition of residential caravan pitch by incorporating into Schedule 10 Note (19) to Group 5 of Schedule 8; and article 9(b) amends paragraph 9 so as to extend the term “mooring” to include anchoring or berthing, by incorporating into Schedule 10 Note (15) to Group 1 of Schedule 9.

• Article 3(b) merely corrects an earlier drafting omission.

• Article 4(a) modifies the provision in paragraph 3(3) which treats more than one building as a single building for the purposes of the election to waive exemption. It does so by deleting the words “parades, precincts and complexes divided into separate units” and replacing them with the narrower category “complexes consisting of a number of units grouped around a fully enclosed concourse”. This therefore increases the scope for electing to waive exemption on buildings on an individual basis as opposed to a single election covering several buildings.

• Article 4(b) does three things. Firstly, it deletes the provision in paragraphs 3(4) and 3(5) which extend an election to waive exemption on agricultural land to all contiguous agricultural land in the same ownership.

• Secondly, it inserts new paragraphs 3(4) and 3(5) which, with the Commissioners' approval, permit the revocation of an election to waive exemption within three months of it having effect, provided it has not been put into practical effect through the charging of VAT or the recovery of input tax, and provided that the property in question has not been sold with a business which is a going concern, or twenty or more years after it has had effect.

• Thirdly, it amends paragraph 3(6) so that to have effect all elections to waive exemption must be notified in writing to the Commissioners within thirty days or such later time specified. Existing elections to waive exemption made before 1st March 1995 which did not at the time need to be notified are preserved under paragraph 3(6)(a).

• Article 4(d) amends paragraph 3(9) so that, in certain circumstances to be described in a Notice issued by the Commissioners, prior permission to waive exemption is automatically given.

• Article 5 deletes in its entirety paragraph 4 which in paragraphs 4(1) to 4(4) requires the first rent payment when an election to waive exemption is made to be apportioned, and in paragraph 4(5) contains a measure which ceased to have effect on 1st August 1993.

• Articles 6, 7 and 8 amend paragraphs 5, 6 and 7 to gradually abolish the Developer’s Self-Supply Charge.

• Article 6 does two things. Firstly, in article 6(c) it amends paragraph 5(3)(a) so that any building or civil engineering work the construction of which commences after 28 February 1995 does not fall within the self-supply provisions in paragraphs 5 and 6.

• Secondly, in articles 6(b) and 6(d) it adds a new paragraph 5(3A), which facilitates the removal from the Self-Supply Charge of any building or civil engineering work started before but still being constructed on 1st March 1995, provided that any input tax claimed on account of a Self-Supply Charge is repaid and no such input tax is claimed thereafter.

• Thirdly, for all buildings and civil engineering works still within the scope of the Self-Supply Charge, article 6(a) amends paragraph 5(1) so as to create a final deemed self-supply on 1st March 1997. This includes buildings and civil engineering works still under construction where construction commenced before 1st March 1995 and the provisions in paragraph 5(3A) have not been applied.

• Article 6(e) merely ensures that input tax on acquisitions from other EC member States is included when determining whether a person is a fully taxable person.

• Articles 6(f) and 6(g) are consequential amendments to ensure that the provisions concerning the Self-Supply Charge on new buildings apply similarly to existing buildings which have been reconstructed, enlarged or extended.

• Article 7 also contains a consequential amendment relating to existing buildings which have been reconstructed, enlarged or extended. It also adds a new paragraph 6(9) concerning the basis of the deemed Self-Supply Charge on 1st March 1997 for developments still in progress.

• Article 8 amends paragraph 7 so that where a deemed self-supply on 1st March 1997 takes place, there having been no earlier self-supply, it will not be necessary for the person liable to the charge to notify his landlord, lessor or licensor of the fact for the purposes of item 1(b) of Group 1 of Schedule 9.

• Article 9(a) amends paragraph 9 to reflect the revised Note numbering in Group 5 of Schedule 8.