There are special VAT rules that allow businesses to standard rate the supply of most non-residential and commercial land and buildings (known as the option to tax). This means that subsequent supplies by the person making the option to tax will be subject to VAT at the standard rate.The ability to convert the treatment of VAT exempt land and buildings to taxable can have many benefits. The main benefit is that the person making the option to tax will be able to recover VAT on costs (subject to the usual rules) associated with the property, including the purchase and refurbishment of the property.It is very important in ensure that businesses are aware of all their obligations in relation to opting to tax as the absence of doing so can result in an increased VAT cost. For example, any subsequent sale or rental of the property will attract VAT.Where the purchaser or tenant is able recover the VAT charged this is not normally an issue. However, where the purchaser / tenant is not VAT registered or not fully taxable (such as bank), the VAT can become an additional (non-recoverable) cost.Planning noteOnce an option to tax has been made it can only be revoked under limited circumstances. This includes within a specified ‘cooling off’ period in the first 6 months, an automatic revocation where no interest has been held for more than 6 years and after 20 years has elapsed. There are strict rules and conditions which must be met for these revocations to apply.