VAT on property - Why Entrepreneurs shouldn't overlook VAT

Property developers and investors are a vital part of the UK economy, providing commercial premises for businesses and residential housing stock for workers. Property Entrepreneurs often understand the Income Tax, Corporate Tax and Capital Gains tax implications of their projects.  However, VAT is one area of tax that is often overlooked and commonly misunderstood, so we have put together a guide to highlight issues affecting VAT on Property.

Failing to consider VAT can have expensive consequences, since the costs of properties are often substantial, and advice should be sought prior to the start of any new project. 

We have seen situations where a developer has been charged the incorrect amount of VAT (20% rather than 5%) on development costs converting commercial property into residential, resulting a real cost to the business.   This can be easily managed and avoided by ensuring the right amount of VAT is charged by the contractor.

Another common scenario is where the purchaser of a property must make an Option to Tax the property to avoid VAT on the purchase price.  If this is not done in advance it can create cash flow issues and additional Stamp Duty Land Tax.  Again, this can be managed providing the circumstances are right. 

Our guide “Six Issues affecting VAT on Property - VAT advice for property developers and investors” explores some of the key VAT aspects of dealing in property in more detail, and crucially how to manage VAT costs. 

If you have any VAT related questions, please follow the link below to arrange your free consultation with one of our team.

Other related articles;

• VAT on Commercial vehicles
• What is VAT? - A guide to Value Added Tax
• Transfer of going concern and option to tax