Readers’ forum: VAT considerations with extra phone mast income

I act for a client who is buying the freehold of a block of flats which will earn ground rent income from the eighty leaseholders in the block.

Our original thinking was that the land sale would be exempt from VAT but the sellers have put a spanner in the works and said that we must opt to tax the land with HMRC before completion otherwise they will have to charge 20% VAT.

This is because a second source of income is for the rent of a telephone mast at the top of the building. The rent is paid by a telecommunications company and is about 25% of the ground rent income earned from the leaseholders. The seller opted to tax the land and charges VAT on the mast income but not the ground rent charged to the leaseholders.

Presumably my client can avoid a VAT charge by also...