An option to tax made by a member of a VAT group is generally binding upon other members of the same VAT group. For example, A and B are members of the same VAT group. A transfers a building to B which A has opted to tax. B does not opt to tax the building. The transfer is outside the scope of VAT as a transaction between members of the same VAT group. If B decides to let out or sell the building to a tenant or buyer that is not a member of the VAT group, B must charge VAT at the standard rate unless the option to tax is excluded from having effect. Although B has not opted to tax the building, B is a relevant associate of A and the option to tax made by A affects supplies B makes of the building.
The effect of VATA 1994, Sch 10, para 3 is that a person is a relevant associate of
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