Value Added Tax Act 1994 section Schedule 10 paragraphs 2–4

The option to tax

Section Schedule 10 paragraphs 2–4 deal with the effect of exercising the option to tax land, the meaning of "relevant associate" in the context of corporate groups, and the process by which a body corporate can cease to be a relevant associate.

• When a person opts to tax land, any grant they (or a relevant associate within the same VAT group) make in relation to that land loses its VAT exemption and becomes a taxable supply.
• A "relevant associate" is a body corporate treated as a member of the same VAT group as the person who opted to tax, either when the option first took effect or at any later time when either party held an interest in the land.
• A person ceases to be a relevant associate when they no longer hold any interest in the land, have no outstanding or conditional VAT supplies relating to a disposal of such an interest, are no longer in the same VAT group as the opter, and are not connected with anyone who holds an interest in the land and is the opter or another relevant associate.
• Alternatively, a person can cease to be a relevant associate by meeting conditions set out in an HMRC public notice and notifying HMRC, or by obtaining HMRC's prior permission — which may be subject to conditions and, in limited circumstances, may be backdated.