The full spectrum of VAT rates could apply across a property development; VAT exemption, the VAT zero-rate, reduced-rate VAT (5%) and standard-rate VAT (20%), and certain property transactions are even outside the scope of VAT. Because of this complexity and potential restrictions to the recovery of VAT on related costs, VAT should always be a key consideration in all property projects
The rules dictating how VAT reliefs apply can be complex and are often under-utilised by developers. We assist property developers maximise VAT reliefs and minimise VAT costs. VAT reliefs will only typically apply if certain conditions are met, so with our wide knowledge of how VAT applies to property transactions, we are perfectly placed to help you ensure that these conditions are identified and adhered to. If you’d like further help or information about VAT & Property please get in touch.
Our client was buying land that the vendor thought was within the scope of an Option To Tax
The addition of VAT to the sale price would make the transaction untenable, as the client would not be able to recover the VAT.
We reviewed documentation dating back to 2004, when the original Option to Tax was made to understand whether the scope of the Option had been fully defined. We also reviewed the VAT legislation that was in force at the time and identified arguments that would subsequently disapprove of the Option to Tax even if it had been in place.
We presented our arguments to the seller’s solicitors to enable the sale to proceed without a VAT charge being applied, a great outcome for our client.
Our client had acquired an existing block of flats to refurbish for rental.
VAT costs would be irrecoverable but we needed to minimise these costs.
We identified areas where the 5% VAT rate and 0% VAT rate could be applied and then advised the client accordingly.
We drafted a technical note to support the treatment that the client shared with the contractors to ensure that the lower rates of VAT were applied to their invoices.
The client significantly reduced the level of irrecoverable VAT that they paid.
Property transactions can attract different VAT treatments, some are exempt, others are zero-rated, reduced-rated at 5%, or fully standard-rated at 20%. We help you assess the correct treatment based on the property type, purpose, and transaction details.
An Option to Tax is an election made by a property owner to charge VAT on certain property transactions. It can impact the recoverability of VAT and the overall cost of a deal. We review historical documentation and legislation to confirm whether an Option applies and the effect of it,
In some cases, yes. If you're refurbishing residential property for rental or sale, reduced VAT rates may apply to certain works (e.g., converting a non-residential building that has been vacant for a long time). We help you identify and apply the right VAT rate to minimise irrecoverable costs.
Yes, but they often come with strict conditions. We work closely with developers and investors to ensure reliefs are properly applied, documented, and supported, maximising tax efficiency and reducing VAT risks.
VAT can significantly impact cash flow, recoverability, and the feasibility of a transaction. Seeking advice early helps you structure deals correctly, negotiate better terms, and avoid surprises that could delay or derail the project.
