The VAT on Property legislation was overhauled in 2008. Since then a new VAT on property regime has been introduced for property transactions taking place on or after 1 July 2008. The rules are complex and have wide-ranging consequences.
We advise on all VAT on property matters including:
- Deciding whether or not VAT is chargeable on a transaction.
- Completion of VAT on property requisitions and advising on VAT special conditions in contracts of sale.
- The option to tax exempt supplies of property.
- VAT on lettings of immovable goods.
- The Capital Goods Scheme
- Waiver of exemptions from VAT on certain lettings.
- VAT on holiday cottages.
- Property transactions between connected parties.
Typical Problems that we come across
On a sale of property a vendor’s starting position typically is that he will charge VAT on a sale in order to avoid a clawback of VAT under the capital goods scheme. If the purchaser agrees to opt to tax the sale, then:
- the property will remain within the VAT net for 20 years,
- the purchaser will need to monitor the VAT-exempt use of the property over the next 20 years, and
- the purchaser will have an exposure to a VAT clawback on any non-VATable use of the property over the 20-year period.
How We Can Help
In cases like this we would look at the VAT history of the property in question. Through an understanding of the VAT history and the VAT legislation we would aim to arrive at a compromise which would suit both the vendor and the purchaser.
