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HMRC internal manual

VAT Land and Property

HM Revenue & Customs
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Taxable person: land and buildings owned by more than one person: special position concerning nominees


When a company wishes to conceal from the outside world the fact that it owns, and/or is the landlord, of a property it often sets up a nominee company as a barrier. Preservation of confidentiality is paramount in this situation, as it is frequently a commercial requirement.

In such cases the consideration for the granting of any interest in the property will find its way to the beneficial owner via the nominee company. A nominee in this instance is in fact an agent having been nominated to act on behalf of the principal. The legal provisions are in VAT Act 1994, sections 47(2A) and 47(3).

For these provisions to apply there are two basic conditions that must be met:

  • both the principal (the supplier) and the agent are registered for VAT; and
  • the supplies are taxable.

Further details on the invoicing and accounting requirements under this procedure can be found in Notice 700 The VAT Guide and VTAXPER.

Who can register?

The person making the supply is the person eligible for VAT registration, subject to the normal criteria. With co-ownership situation, the key point is that co-owners are liable for registration as a single person rather than individually. Further advice on registration of co-owners can be found in VATREG Registration. 

Who can opt to tax?

Paragraph 40 has the effect of treating the beneficiary as the person making the grant and therefore supplies arising from the grant. Where paragraph 40 has effect and the beneficiary opts to tax, any supplies of the land treated as made by the beneficiary will be taxable supplies (subject to normal rules). It follows that where the beneficiary has not opted, any supplies will be exempt (this is the case even where the grantor has opted). Care should therefore be taken that an option has been made by the appropriate person.

Joint beneficial owners are treated as a single taxable person for the purposes of VAT registration and thus any option to tax binds all beneficiaries collectively. However, where a separate interest is held in the land by only one of the beneficial owners, any option made by the beneficiaries collectively will have no effect in relation to supplies made by the individual beneficiary. For those supplies to be taxable a separate option by the individual beneficiary would be required. It follows that rents paid by a tenant are either wholly taxed or wholly exempt and the situation where tax becomes due on an apportioned basis, according to how many of the joint owners have opted, is avoided.

An option to tax exercised by one trustee on behalf of all the trustees binds all future supplies made by the trustees of the relevant land, irrespective of changes in the identity of the trustees. The same approach applies to beneficiaries treated as a single taxable person.

Further guidance on options to tax can be found in Notice 742A Opting to tax land and buildings.