The VAT rules that apply to property are beautifully complicated which means this list could have been endless but here are the ones that I seem to run into fairly regularly, especially when property is changing hands. Remember if in doubt, call and check it out.
There’s always potential for VAT to get interesting on any sale, purchase, transfer or letting of property especially where it involves –
- Commercial property – relevant considerations include liability, cash flow, TOGC relief, registration arrangements and option to tax dis-application.
- Gifted property e.g. transfers from trust.
- Mixed used buildings where each element may attract different VAT treatment.
- Conversion or empty property projects where there are potentially several different VAT reliefs.
- Non-opted sales where VAT was incurred on the original purchase.
- Part-built buildings where person constructing status may play a part.
- Social housing projects where a VAT charge maybe blocked and costs may result.
- Charity, student, care homes and other projects for multi-person occupation where VAT relief may depend on prior issue of certificates.
- Live: work units where different VAT rules apply to the separate elements.
- Exempt occupiers e.g. health, welfare, finance, charities or insurance.
- Capital goods scheme obligations i.e. self imposed VAT adjustments over a 10-year term where a property purchase or improvement has cost more than £250k.
- Barter arrangements e.g. land swapped for construction of a new building.
- Joint ventures and other partnership situations.
- Contingent consideration e.g. where the value of the supply is profit adjusted.
Remember if there is any doubt about how the VAT rules apply to property it is always a good idea to have it properly checked out. Once the deal has been done, the contract has been signed or the payment’s been made it is simply too late to alter anything and, for good or ill, the VAT accounting will have been crystallised.