VAT on property transactions has three important factors:

  • The legislation is complex
  • There tends to be a lot of money involved
  • You need to be mindful of other taxes always – SDLT, CGT etc

We’ve been advising on VAT on property transactions since before the option to tax was introduced. We’ve seen a lot, and we call upon that history to find solutions for our clients.

Reclaiming VAT

The biggest issue tends to be how the person doing the work can reclaim the VAT they incur – the contractor, the developer and the investor.

Liability of construction costs

The VAT liability of construction costs can vary depending upon what type of work is being done and for whom. Covertax can advise on the correct VAT liability of supplies and may be able to suggest areas in which savings can be made. For example, if you are buying an old property that has been empty for at least two years, you may be eligible for favourable VAT treatment. You may only need to pay VAT at 5% on renovation work.

Use of the option to tax

The option to tax is a useful tool but, in our experience, one that can be used in the wrong circumstances and create future issues. We can advise on the use of the option to tax and the effect of the disapplication legislation.

Arguments based on the facts

We are assiduous in establishing the facts. Often those facts will suggest a solution to us. Sometimes this sits with aspects shown above, but on other occasions we come up with something very different.
For example, we won a case without having to go beyond the advisers to a local officer through our knowledge of EU law and where is it not implemented correctly in the UK.