VAT

VAT

FORTHCOMING CHANGE: HMRC published a call for evidence, ‘Simplifying the VAT Land Exemption’, in May 2021, inviting comments on some radical suggestions for the future scope of the exemption. These included making all ‘short-term or minor’ interests in land subject to VAT, or removing the current ‘option to tax’ rules and instead making all land transactions VATable, subject to specific exemptions such as for property with a residential or charitable purpose. The call for evidence ran from 12 May 2021 to 3 August 2021, and HMRC intends to hold further discussions with businesses in 2022. For more information, see News Analysis: Views on HMRC’s proposals to simplify VAT land exemption rules.

There are multiple VAT issues that arise in a property context. For a checklist-style summary of the key VAT issues to consider when undertaking a property transaction, see: VAT on property transactions—checklist.

The default position is that most supplies of interests in or rights over land and buildings (including freehold sales and leasing) are exempt from VAT, but there are many exceptions.

The effect of making an exempt supply of land is that

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Property News

Property weekly highlights—19 December 2024

This week's edition of Property weekly highlights includes: cases on repudiatory breach of a lease, the Tenant Fees Act 2019 and the right to manage, and a look at the proposed reform of the energy performance in buildings regime and proposed planning reforms.

Mayors to be given greater planning powers under ‘devolution revolution’

Planning analysis: An English Devolution White Paper (the Paper) proposes to give Mayors new development management powers, including the ability to call in planning applications of strategic importance and to charge developers a Mayoral Levy to ensure that new developments come with the necessary associated infrastructure. This analysis focuses on the proposals relating to Mayors’ planning powers under the Paper.

HM Land Registry publishes blog post on easement applications

HM Land Registry (HMLR) has published a blog post, addressing common issues associated with easement applications, aiming to assist conveyancers and legal professionals avoid common pitfalls. The post confirms that as an easement constitutes a disposition, under the Land Registration Act 2002 (LRA 2002) it must be registered to operate at law. It also provides guidance on the correct procedures for submitting applications. Key points include using form AP1 (or AN1 for unregistered legal estates) and ensuring all affected registered title numbers are included in the application. The blog also highlights that failing to apply against all relevant titles can result in significant issues, potentially rendering easements unenforceable against subsequent purchasers. For prescribed clauses leases, HMLR confirms that it will only make an appropriate entry for easements granted that are referred to in clause LR11. Additionally, LR2.2 must specify the landlord’s title number and any other title numbers over which the easements in LR11 are granted. If LR2.2 is properly completed, there is no need to make a further application.

Energy Performance of Buildings regime—MHCLG and DESNZ set out ambitious targets in a new consultation building on the previous MEES consultations

Environment analysis: The UK government has launched a consultation to reform the Energy Performance of Buildings (EPB) regime, a crucial step towards achieving the nation’s ambitious net-zero targets by 2050. This extensive consultation, which runs until 26 February 2025, seeks to gather input on several key areas of the EPB framework. Here, we delve into the background leading up to this consultation, the key areas being consulted on, and likely next steps.