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HMRC internal manual

VAT Land and Property

Option to tax - anti-avoidance test: what is the meaning of 'eligible purposes'?: what about occupation by doctors, schools, universities and other types of businesses who make predominantly exempt supplies?

As these businesses would not be occupying the land for wholly or substantially wholly eligible purposes, the input tax incurred is normally not recoverable.

There are, however, some exceptions, such as the use of a building by a university for taxable research.