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What is the option to tax?

The option to tax is a choice (or election) by a business to waive the VAT exemption on the supply of certain land and buildings. Supplies of land and buildings which are covered by the option to tax are therefore standard-rated rather than exempt. There are potential advantages and disadvantages to this waiving of exemption and each case has to be considered on its merits. A key advantage is that the option to tax may entitle a business to recover additional input tax. If a decision is made to opt to tax land and buildings then that decision