VAT on property

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

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Latest Tax News

Tax weekly highlights—21 November 2024

This week's edition of Tax weekly highlights includes: (1) the Supreme Court decision in Refinitiv concerning the interaction between the diverted profits tax and an advance pricing agreement, and (2) the Supreme Court decision in Cobalt Data Centre on the scope of the enterprise zone allowance.

UT finds FTT made errors when setting aside HMRC best judgment assessment (HMRC v Sintra Global)

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Supreme Court rules on the scope and limitations of the enterprise zone tax incentive (R (oao Cobalt Data Centre) v HMRC)

The Supreme Court unanimously dismissed the taxpayers’ argument that the relevant expenditure fell within section 298(1) of the Capital Allowances Act 2001 (CAA 2001) and concluded that, based on the proper interpretation of that provision, the expenditure was not incurred under a contract executed prior to the conclusion of the initial ten-year period, as required. Adam Craggs, partner at RPC, discusses the implications that the judgment has on taxpayers going forward.

Consultation on expanding tax conditionality to new sectors

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