Residential development—VAT issues
Produced in partnership with Martin Scammell

The following Tax practice note produced in partnership with Martin Scammell provides comprehensive and up to date legal information covering:

  • Residential development—VAT issues
  • Outright sale of new houses
  • VAT registration
  • Different types of residential development
  • New flats
  • Holiday homes
  • Other types of residential accommodation
  • Buildings not wholly new
  • Shorter leases and lettings
  • Minimising VAT incurred
  • More...

Residential development—VAT issues

This Practice Note is about the VAT issues that arise in residential developments. It covers:

  1. different types of development

  2. the implications of granting short leases

  3. planning obligations and local infrastructure

  4. incentives offered to buyers

  5. disposals of surplus land and uncompleted developments, and

  6. issues with subsequent grants of overriding leases and sales of reversions

For VAT issues in commercial developments, see Practice Note: Commercial development—VAT issues.

Outright sale of new houses

Residential developments can involve a range of issues, and it is convenient to start with the most straightforward position before considering variations on it.

In this case, the developer:

  1. acquires land, on which it obtains planning permission

  2. constructs new houses on it, as family homes

  3. sells the houses and their plots outright on completion, and

  4. dedicates the whole of the rest of the site, such as roads, to the local authority

The construction of the houses will be zero-rated (see Practice Note: VAT treatment of building work), but the developer will incur VAT on fees, on some goods included in the development, and possibly on the land.

Since 1 March 2021, many supplies of building work have been subject to a reverse charge, so that the VAT is accountable by the customer, and not the supplier (see Practice Note: VAT—the reverse charge for building work). This does not apply to residential developers who notify their contractors that

Related documents:

Popular documents