VAT on property transactions
Whether you're a commercial developer, house-builder, investor, landlord or tenant, just about every business in the UK has some involvement in property. VAT and property issues can be extremely complicated and if misunderstood costly mistakes can be made. Once you've done the deal, you can't go back and change things to avoid an unforeseen VAT cost.
For example, the option to tax can be of a significant benefit to business. However, if used in the wrong circumstances it can create expensive future issues. We can advise on the use of the option to tax.
It certain circumstances it is possible to disapply the option to tax and create a significant VAT saving. We can advise on the effect of the option to tax disapplication legislation.
The VAT liability of construction costs can vary depending upon what type of work is being completed and for whom. HB&O 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 to VAT at the reduced rate of 5% on the renovation work. Thus, saving your business 15% VAT on what are likely to be irrecoverable VAT costs.
The best way to minimise costs and avoid problems is to consider the VAT implications of any proposed transaction during the planning stage before anything is signed or agreed. It is then possible to identify potential problems and consider viable alternatives. The cost of getting it wrong could be significantly more expensive than the cost of a few hours of a VAT consultants’ time.