In Landlinx Estates Ltd v HMRC [2020] TC7706, the First Tier Tribunal (FTT) found that release of an option to buy land (which was not opted to tax) was an exempt supply in line with EU legislation and HMRC's long-standing guidance. HMRC failed in its attempt to advance an argument to the contrary.

  • Landlinx received £1,425,000 from a landowner to surrender the call option on land that neither it nor the landowner had opted.
  • Landlinx treated the surrender as the supply of an exempt interest in land in line with HMRC's long-standing published practice that treated the grant of a call option on land as exempt unless the supply of the underlying land is taxable i.e. the release, assignment or surrender of a call option on land mirrors the underlying interest in the land.
  • HMRC argued that although the grant and surrender of call options could be exempt by reference to the wording in the UK VAT legislation, such supplies fall outside any of the land exemptions contained in the EU VAT legislation. As such, the call options are outside the land exemption and therefore subject to VAT.
  • HMRC assessed Landlinx had under-declared its output tax by £237,500 i.e. 1/6 of £1,425,000.
  • Landlinx appealed to the FTT.

The FTT found that call options are exempt under the EU legislation and therefore that it would be correct to read the UK legislation as exempting the grant, surrender or assignment of a call option (subject to an option to tax).

The taxpayer's appeal succeeded. HMRC have confirmed they will not be appealing the decision.


VAT: Land & Property (notes)
A handy outline of the VAT treatment of some of the more common supplies of land and property

VAT: Land & Property at a glance
An at a glance guide to VAT on common land and property transactions.

Opting to tax land and property
What is an option to tax? What do I need to do to opt to tax? What happens if I buy an opted property?

External links

Landlinx Estates Ltd v HMRC [2020] TC7706