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VAT Regarding VATA72 s4, 21 AC 2000 VAT
Act 1972 Section 4(3) Regulation 19 of 1979. Taxpayer
company developed a number of apartments and leased them to a hotel operating
company for use in its hotel business. The agreements contained two option
clauses. (a) After two
years and nine months the tenant could exercise an option to extend the lease
for a further twelve months, and (b) after the expiration of the
additional twelve months the lessee could exercise a further option to extend
the lease for a period of years which would bring the total letting up to twenty
years. The lettings were treated, in
accordance with Revenue practice, as being long term and there was a
disagreement between the taxpayer and the Revenue as to whether and, if so, how
Regulation 19(2)(b) of the Value Added Tax Regulations 1979 applied in relation to
valuing the reversionary interests under the leases. Decision By virtue of Section 4(3) the original
leases should be treated as
"self-supplies" by the taxpayer. The
lessee's option to extend the term did not affect this conclusion. The
standard Revenue practice was not in accordance with the legislation.
Accordingly, the difference of opinion between the Taxpayer and the Revenue in
relation to the regulations was not a matter on which the Appeal Commissioners
needed to express an opinion. |
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