Posted by James Pearson on 05 Oct 2012

VAT for Property Developers

A property developer selling a residential new build is making a zero rated supply for VAT purposes and should be able to reclaim the costs of constructing that property. HM Revenue and Customs (HMRC) have limited the input VAT that can be reclaimed to exclude goods other than building materials that are “incorporated” in the building. This can include white goods, carpeting and furniture.

A case going before the tribunal is challenging this treatment on that grounds that it is too wide an interpretation of “incorporated” and that the treatment clashes with EU law.

If this case is successful, property developers may be in a position to reclaim input VAT on past developments. If you have been affected by this HMRC treatment of incorporated goods and want to take steps to secure this potential refund, you should consider submitting a claim for a refund now in order to protect your position in the event that the case goes against HMRC.

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See also…

Property Partnership Incorporation and SDLT

Selling Private Assets

How to Own Property

Income Tax Payable on UK Property Income

UK Property Sales: Capital Gains Tax for Non-Residents

Retained Cash and Business Property Relief

UK Property Income Taxation

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