Zero rate or Not
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17th January 2014
If you or your client are involved in developing a property
it is always worth taking professional VAT advice as land and property
complex area from a VAT view point. It is very easy to make costly
which can result in a profitable development not achieving the profit
if an assessment for VAT penalties and interest is incurred. This is
highlighted in the case for McCarthy & Stone where HMRC sought
the VAT treatment of a development.
The business specialises in building and selling retirement
accommodation. These are generally separate apartments with
communal areas for residents such as lounges that are also furnished by
the business. The apartments are sold by long lease to the residents
the right to use the communal areas granted as part of the lease. A
paid for the lease with an additional sum toward fixtures and fittings.
terms of the lease also included ongoing rent and an annual charge for
use of the
HMRC sought to argue that the business was either making an
exempt supply of land plus the zero rate long lease or was making a
supply part of which was zero rated (the long lease) and part exempt
of the furnished area). This would then allow HMRC to block some of the
VAT on costs recovered by the business on the basis that the costs were
used for wholly VATable purposes.
The tribunal determined that the business had made a single
supply of the new residential accommodation, which is sensible given
that it is
clear that the communal areas are provided for the better use and
the supply of the accommodation to the residents occupying the
One simple free call may save your
business a substantial sum in lost VAT , interest and penalties.
About the Author
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 2014-01-23 13:03:06 in Tax Articles