Value Added Tax Consolidation Act 2010 section 95

Transitional measures for supplies of immovable goods

Section 95 sets out the transitional measures that apply to properties subject to VAT under the pre-1 July 2008 rules when those properties are subsequently supplied or let under the post-1 July 2008 rules.

• Transitional properties include freeholds and freehold equivalent interests held on 1 July 2008, legacy leases (long leases of ten years or more treated as supplies of goods under the old rules) held on that date, and residential property or burial grounds acquired and completed by a public body before 1 July 2010
• Where the vendor had no entitlement to deduct VAT on the acquisition or development of the property, the supply is exempt but the parties may exercise a joint option for taxation
• A landlord who makes an exempt letting of a transitional property on which input VAT was previously deducted must calculate and pay a deductibility adjustment based on the unexpired portion of a 20-year period
• The assignment or surrender of a legacy lease within its 20-year adjustment period is taxable where the tenant had input VAT deductibility, with tax calculated as T × (N/Y) and accounted for by the assignee or surrenderee on a reverse charge basis

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