Buy land with a view to build residential flats on it

Buy land with a view to build residential flats...

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My client, a limited company, is buying a piece of land to develop into residential flats to sell. As the flats are new they become zero rated for VAT. I believe the company can claim standard VAT on the acquisition of land. Is this correct? Would appreciate your comments.

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By Alastair Johnston
25th Apr 2014 09:43

Yes.
The VAT on the land is attributable to the company's intended future ZR sales of the completed flats, so it is fully recoverable.

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Replying to lionofludesch:
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By MGD
25th Apr 2014 10:00

Thanks a lot Alastair. Much appreciated.

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By DMGbus
25th Apr 2014 13:58

Vat recovery in jeopardy if rented out

It is important that the new build residential property is built with the intention of selling as new properties (=zero rated) - then the VAT recovery is OK.

If on the other hand the newly built property is NOT sold and instead is retained for residential letting then this is an exempt supply putting the VAT recovery in jeopardy.

 

 

 

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Replying to Glennzy:
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By MGD
25th Apr 2014 14:06

Very true and I have already pointed it out. Thanks a lot.

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