Barter transactions involving land and buildings—VAT implications

Produced in partnership with Martin Scammell

Practice notes

Barter transactions involving land and buildings—VAT implications

Produced in partnership with Martin Scammell

Practice notes

This Practice Note is about the VAT implications of supplies of land and buildings where the consideration is something other than money (barter transactions).

Why does this matter?

Barter transactions can create unanticipated VAT liabilities and may have other unwelcome VAT consequences, of which the parties need to be aware. VAT clauses in contracts relating to transactions of this type may need careful drafting.

What to look for

The issues arise where consideration for a supply is not, or is not wholly, in money. So the monetary consideration is likely to be less than one would expect. In a commercial context, transactions that are described as gifts, or are for a low price or a low rent, will usually be part of a barter, whether or not the parties have thought of it in those terms.

Some barter transactions, such as an exchange of one plot of land for another, are easily identifiable. Other cases are less obvious. To consider the position, you may need to break a deal down into its constituent parts,

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Martin Scammell

Martin Scammell is an independent VAT consultant, specialising in property and construction matters, who works with tax departments in major corporates and universities, and with a number of law and accountancy firms. He is the author of the leading reference work on VAT and property.

Martin started out in VAT Policy in Customs & Excise, was a Partner at Ernst & Young, where he headed up the VAT real estate group, and then became head of indirect tax at Eversheds.

He has been involved in the development of VAT legislation and policy over many years, and regularly serves on working parties established by HMRC. He was a member of the Office of Tax Simplification’s consultative committee for their review of VAT in 2017, and in 2018-19 of HMRC’s external stakeholder group considering the proposed reverse charge for building work. Martin currently works with HMRC as technical secretary to the British Property Federation’s VAT Committee, as an adviser to the British Universities’ Finance Directors’ Group and as a member of HMRC’s Joint VAT Consultative Committee and VAT Land and Property Liaison Group. He is a member of the Chartered Institution of Taxation’s indirect taxes and property taxes committees.

Jurisdiction(s):

United Kingdom

Key definition:

Liabilities definition

What does Liabilities mean?

A scheme's liabilities are its future benefit payments and expenses. The scheme is in deficit if the current value of its liabilities is more than the assets, or in surplus if the liabilities are less.

Barter transactions involving land and buildings—VAT implications

Produced in partnership with Martin Scammell

Barter transactions involving land and buildings—VAT implications

Produced in partnership with Martin Scammell

Why does this matter?

What to look for

Key definition:

Liabilities definition

What does Liabilities mean?

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