Spice Ltd has decided to expand its investments in rental properties. It has therefore decided topurchase two currently empty properties on 1 May 2022.The first property is a commercial office block built in June 2016. The vendor purchased thebuilding new in June 2016 and has always rented out the building. Accordingly, the vendorexercised the option to tax with regard to this building. The rental agreement with the existingtenants will expire before Spice Ltd acquires the building. Spice Ltd intends to rent it out to variousnew tenants by sub-dividing the floors. Only some of the tenants are likely to be VAT-registered.Spice Ltd will pay 1 million to the vendor for the building.The second property is a new building consisting of 10 residential apartments in a single block at atotal cost of 1.5 million. Spice Ltd intends to rent the apartments to private individuals.RequirementExplain to Spice Ltd the VAT implications of the above transactions. Your answer should include anexplanation of:whether VAT is payable on the purchase price;whether any input VAT is recoverable; andthe meaning of an 'option to tax' and the current and future effects for Spice Ltd of such anoption on either or both of the propertie