Transitional measures applying to legacy leases
This section deals with the transitional measures applying to legacy leases. Together with freehold interests or freehold equivalents held prior to 1 July 2008, these leases are referred to as transitional properties.
What are legacy leases?
Legacy leases are interests in property that were treated as a supply of goods under the old Value-Added Tax (VAT) on property rules, which is a lease of ten years or longer created prior to 1 July 2008. The term does not include interests that constitute freehold equivalent interests.
The lease must have been held by a taxable person on 1 July 2008, and it must form part of the assets of a business at that date.
Prior to 1 July 2008, the creation of a legacy lease and, in most cases, its subsequent assignment to another tenant, was chargeable to VAT at the reduced rate as a supply of goods (property).
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