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2014 Budget Impact on VAT Land and Property

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The VAT People - Expert Author

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4th April 2014

One of the most complex areas of VAT is the law applying to land and property transactions and construction/conversion services. There were no changes to the VAT law for land and property in the 2014 budget, however, one of the budget highlights was the Government’s focus on funding to improve the infrastructure of the UK including funding for new social housing, a new ‘garden city’ on brownfield at Ebbsfleet, and the release of more government owned land for redevelopment. Whilst this does not immediately shout ‘think VAT’ this is likely to have VAT consequences for a number of businesses and entities.

If businesses are providing construction services relating to the new social housing or buildings on green field sites, they may be making zero rate supplies of new build dwellings, converting existing commercial properties to residential use (which may qualify for the reduced rate of VAT) or simply upgrading existing dwellings that will attract VAT at the standard rate.

This mix of potential VAT rates for construction services makes it easy for the supplier of the services to either under declare VAT creating an exposure to an assessment for VAT, penalties and interest, or overcharge VAT at the incorrect rate making services un competitive and also meaning that the suppliers customer will be unable to recover the VAT charged to it in error.

There are also VAT issues to consider for recipients of construction and conversion services that will only be able to claim VAT charged to them if they use the services acquired to make an onward VATable supply, or in the case of private individuals are in the position to make a valid VAT claim under the DIY House Builders scheme.

If you have clients or are a business that makes or intends to make supplies of construction services or will buy in construction services it is always worth calling our free VAT helpline for a no obligation initial chat to establish if there are any VAT exposures or missed VAT opportunities.


About the Author

The VAT People are leading VAT and Customs Duty consultants based in the North West of England. We work with a wide range of businesses throughout the UK as well as assisting our accountancy colleagues to unravel the thorny VAT issues for their clients. We are one of the UK's largest and most comprehensive sources of VAT and Customs advice, our consultancy team having over 140 years of experience in VAT and Customs gained in either HMRC or a Big 4 accountancy practice environment.

Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.



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Article Published/Sorted/Amended on Scopulus 2014-04-08 10:10:22 in Tax Articles

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