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VAT position - land broker?

VAT position on a land broker

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New client is a land broker i.e. middle man between buyer and seller. He receives income as part of the land purchase/sale. Income can be few and far between, but when it occurs it can be for large amounts. Client believes his income is VAT exempt as it is part of a "sub sale" through the solicitors dealing with the purchase/sale. I wanted to get peoples views on the VAT treatment of his introductory income. 

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14th Jun 2019 12:41

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14th Jun 2019 15:51

There is no such VAT exemption for land broker services and the usual VAT registration etc. rules for the supply of services apply.

He would have to genuinely have an interest in the underlying land to receive a non-VATable profit share from the subsale and that is a matter of construction of the contract (that would not be without potential SDLT consequences however). As Lord Neuberger stated in Secret 20 Hotels 2 Ltd v. HMRC:

“…one must be careful before stigmatising the contractual documentation as being “artificial”, bearing in mind that EU law, like English law, treats parties as free to arrange or structure their relationship so as to maximise its commercial attraction, including the incidence of taxation…”

Of course, he may even then have to issue a VAT invoice to the subpurhaser, depending on the usual VATable tests for land sales.

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14th Jun 2019 14:07

Presume the contract supports the client's "analysis"?

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