Value Added Tax Act 1994

Valid from 19/03/1997

[F13A(1)This paragraph shall have effect for the construction of paragraph 2(3AA) above.

(2)For the purposes of paragraph 2(3AA) above a grant made by any person in relation to any land is a grant made by a developer of that land if—

(a)the land, or a building or part of a building on that land, is an asset falling in relation to that person to be treated as a capital item for the purposes of any regulations under section 26(3) and (4) providing for adjustments relating to the deduction of input tax; and

(b)the grant was made at a time falling within the period over which such regulations allow adjustments relating to the deduction of input tax to be made as respects that item.

(3)In paragraph 2(3AA) above and this paragraph the references to a person’s being responsible for financing the grantor’s development of the land for exempt use are references to his being a person who, with the intention or in the expectation that the land will become, or continue (for a period at least) to be, exempt land—

(a)has provided finance for the grantor’s development of the land; or

(b)has entered into any agreement, arrangement or understanding (whether or not legally enforceable) to provide finance for the grantor’s development of the land.

(4)In sub-paragraph (3)(a) and (b) above the references to providing finance for the grantor’s development of the land are references to doing any one or more of the following, that is to say—

(a)directly or indirectly providing funds for meeting the whole or any part of the cost of the grantor’s development of the land;

(b)directly or indirectly procuring the provision of such funds by another;

(c)directly or indirectly providing funds for discharging, in whole or in part, any liability that has been or may be incurred by any person for or in connection with the raising of funds to meet the cost of the grantor’s development of the land;

(d)directly or indirectly procuring that any such liability is or will be discharged, in whole or in part, by another.

(5)The references in sub-paragraph (4) above to the provision of funds for a purpose referred to in that sub-paragraph include references to—

(a)the making of a loan of funds that are or are to be used for that purpose;

(b)the provision of any guarantee or other security in relation to such a loan;

(c)the provision of any of the consideration for the issue of any shares or other securities issued wholly or partly for raising such funds; or

(d)any other transfer of assets or value as a consequence of which any such funds are made available for that purpose.

(6)In sub-paragraph (4) above the references to the grantor’s development of the land are references to the acquisition by the grantor of the asset which—

(a)consists in the land or a building or part of a building on the land, and

(b)in relation to the grantor falls to be treated for the purposes mentioned in sub-paragraph (2)(a) above as a capital item;

and for the purposes of this sub-paragraph the acquisition of an asset shall be taken to include its construction or reconstruction and the carrying out in relation to that asset of any other works by reference to which it falls to be treated for the purposes mentioned in sub-paragraph (2)(a) above as a capital item.

(7)For the purposes of paragraph 2(3AA) above and this paragraph land is exempt land if, at a time falling within the period mentioned in sub-paragraph (2)(b) above—

(a)the grantor,

(b)a person responsible for financing the grantor’s development of the land for exempt use, or

(c)a person connected with the grantor or with a person responsible for financing the grantor’s development of the land for exempt use,

is in occupation of the land without being in occupation of it wholly or mainly for eligible purposes.

(8)For the purposes of this paragraph, but subject to sub-paragraphs (10) and (12) below, a person’s occupation at any time of any land is not capable of being occupation for eligible purposes unless he is a taxable person at that time.

(9)Subject to sub-paragraphs (10) to (12) below, a taxable person in occupation of any land shall be taken for the purposes of this paragraph to be in occupation of that land for eligible purposes to the extent only that his occupation of that land is for the purpose of making supplies which—

(a)are or are to be made in the course or furtherance of a business carried on by him; and

(b)are supplies of such a description that any input tax of his which was wholly attributable to those supplies would be input tax for which he would be entitled to a credit.

(10)For the purposes of this paragraph—

(a)occupation of land by a body to which section 33 applies is occupation of the land for eligible purposes to the extent that the body occupies the land for purposes other than those of a business carried on by that body; and

(b)any occupation of land by a Government department (within the meaning of section 41) is occupation of the land for eligible purposes.

(11)For the purposes of this paragraph, where land of which any person is in occupation—

(a)is being held by that person in order to be put to use by him for particular purposes, and

(b)is not land of which he is in occupation for any other purpose,

that person shall be deemed, for so long as the conditions in paragraphs (a) and (b) above are satisfied, to be in occupation of that land for the purposes for which he proposes to use it.

(12)Sub-paragraphs (8) to (11) above shall have effect where land is in the occupation of a person who—

(a)is not a taxable person, but

(b)is a person whose supplies are treated for the purposes of this Act as supplies made by another person who is a taxable person,

as if the person in occupation of the land and that other person were a single taxable person.

(13)For the purposes of this paragraph a person shall be taken to be in occupation of any land whether he occupies it alone or together with one or more other persons and whether he occupies all of that land or only part of it.

(14)Any question for the purposes of this paragraph whether one person is connected with another shall be determined in accordance with section 839 of the Taxes Act.]