Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Anti-avoidance definition

What does Anti-avoidance mean? Anti-avoidance describes measures used to stop parties structuring transactions to sidestep statutory liabilities or weaken creditor protections. In pensions practice in the UK, it most often refers to The Pensions Regulator’s (TPR) powers to deter or remedy avoidance of defined benefit scheme obligations, especially the section 75 employer debt. Although “anti-avoidance” is a descriptive term, key powers are set out in legislation. Under the Pensions Act 2004 (as amended, notably by the Pension Schemes Act 2021), TPR may issue: - Contribution notices (CNs), requiring payment to a scheme. Statutory “tests” include main purpose, material detriment, and (from 2021) the...

UK VAT on land and buildings: Disapplication of the option to tax under anti-avoidance rules—CGS, occupier tests, development financiers and TOGC implications

Published by a LexisNexis Tax expert

Practice notes

This Practice Note explains when the VAT option to tax is disapplied under anti-avoidance provisions (see Practice Note: The option to tax land and buildings).

Why does this matter?

Where the conditions set out in this Practice Note are satisfied, the option to tax is switched off automatically. The parties have no discretion, and no tax avoidance purpose is required. As a result, the option can be turned off in routine commercial deals, so significant caution is often necessary. The rules operate to override an option to tax and render a sale or letting exempt, preventing the vendor or landlord from reclaiming VAT attributable to the property. The consequences can be especially severe for property developers. The regime is also pertinent to transfers of a going concern (TOGC) (see Practice Note: VAT—transfers of a going concern involving land and buildings), and it is sometimes invoked deliberately so that a deal is VAT-exempt. Disapplication suspends the option rather than nullifies it. Even if the option is disapplied for a particular transaction, it may still take effect for subsequent transactions. Accordingly, later supplies could still fall within the option once disapplication ceases. In short, the option is paused, not abolished...

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Martin Scammell

Martin Scammell is an independent VAT consultant, specialising in property and construction matters, who works with tax departments in major corporates and universities, and with a number of law and accountancy firms. He is the author of the leading reference work on VAT and property.Martin started out in VAT Policy in Customs & Excise, was a Partner at Ernst & Young, where he headed up the VAT real estate group, and then became head of indirect tax at Eversheds.He has been involved in the development of VAT legislation and policy over many years, and regularly serves on working parties established by HMRC. He was a member of the Office of Tax Simplification’s consultative committee for their review of VAT in 2017, and in 2018-19 of HMRC’s external stakeholder group considering the proposed reverse charge for building work. Martin currently works with HMRC as...

Web page updated on 21/05/2026

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