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Land and Property

Land and property is a notoriously complex area for VAT purposes and there are many cases of individuals and businesses having found themselves in a position where they have either incurred a substantial VAT bill that was unexpected or that they realise too late that the VAT on a project could have been minimised or reclaimed.

VAT registered owners of commercial property, for example, may incur and recover VAT on the purchase of a property without thinking too much about it, but fail to consider issues such as increased Stamp Duty costs and the fact that if the property is sold on or leased without the owner electing to waive exemption, this will be an exempt supply and some of the VAT on the original purchase could be lost. Indeed, where a property has been purchased for £250,000 or more plus VAT, the VAT incurred must be adjusted over a period of 10 years to take account of any change in taxable use. It is also possible, in certain circumstances, to transfer tenanted commercial property between VAT registered businesses without charging VAT, as a Transfer of a Going Concern.

Similarly, owners of residential property often resign themselves to the fact that they must suffer VAT at 17.5% on works to their property. What many are unaware of is that, under measures brought in by the Goverment in May 2001, there is now a reduced rate of 5% VAT available for certain conversions of properties and renovations of properties that have been empty for more than three years. In addition, there is scope for alteration works to listed properties to be 'zero rated' and for people who build their own houses, or convert non-residential properties for private use, to reclaim VAT that they incur on the project.

We have been involved in many property projects and our land and property specialist, Allison Broadey, would be pleased to discuss with you how The VAT Consultancy can be of assistance with your specific property issues.