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Vat on land

Vat on land

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If a builder buys land with an option to tax but intends to build houses on the land I presume he will incur vat and recover on the first vat return.

I believe if it was a house builders diy claim you can disapply the option but it seems you cannot do this with land as a builder.

Many thanks...

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By David Ex
26th May 2022 22:33

VAT + land = complicated!

Have you read this notice which might shed some light:

https://www.gov.uk/guidance/opting-to-tax-land-and-buildings-notice-742a ?

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By the_drookit_dug
26th May 2022 23:02

The land will only be opted to tax if he opts to tax it!

The seller may have opted to tax it and therefore will charge VAT on its sale, but that does not mean that it is opted to tax in the hands of the purchaser. They could decide not to opt to tax it. Their ability to recover the VAT paid on its purchase will depend upon whether their intention is to use it in making taxable supplies (e.g. new build houses).

Paid for professional advice is crucial here - presumably big numbers are involved!

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RLI
By lionofludesch
26th May 2022 23:28

Why can't he just reclaim the input tax?

Like he would on bricks and timber.

What's the difference?

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By DKB-Sheffield
27th May 2022 00:33

What does the builder intend to do with the new-build houses once completed? Sell them, or rent them?

If the latter (rent) is there a 'development' and 'investment' structure in place?

Answer both of those (well, maybe just que 1) and you should be well on the way with the 'what' and 'why'.

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Replying to DKB-Sheffield:
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By mikeyban
27th May 2022 07:25

He is going to sell them as a dwelling….

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