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The commentary in this article relates to the effect and scope of an option to tax on the basis that the option to tax is not excluded from having effect. In certain circumstances, however, an option to tax is excluded from having effect, or may be excluded from having effect, if certain conditions are met. For commentary on when an option to tax is excluded from having effect, see V4.118.

If a person, or a relevant associate of the person, opts to tax land or a building and makes a grant of the land or building that would otherwise have been exempt from VAT, the effect of VATA 1994, Sch 10, para 2 is that the grant will be subject to VAT at the standard rate.

The effect of VATA 1994, Sch 10, para 31 is that if a landlord opts to tax a property after making a grant of the property that results in periodic rental income, the option to tax affects the rental income arising (for