Town regeneration case study—VAT issues
Produced in partnership with Martin Scammell
Town regeneration case study—VAT issues

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

  • Town regeneration case study—VAT issues
  • The scenario
  • Site assembly—VAT analysis
  • N’s works—VAT analysis
  • Disposal by Council—VAT analysis
  • Leases granted by N—VAT analysis
  • Warehouses for residential conversion—VAT analysis
  • Land for residential development—VAT analysis
  • Disposal of development—VAT analysis

This Practice Note looks at VAT issues in a town centre regeneration scheme, by way of a case study.

The scenario described below, based loosely on a real scheme, illustrates the type of VAT considerations that are likely to be relevant to a property development scheme involving a local authority.

The scenario

The English town of M has been in decline in recent years, and M Council has considered proposals put forward by a number of developers. It decides to proceed with the scheme proposed by developer N. As well as promising to regenerate the town, this will provide the Council itself with new offices and a theatre.

The scheme is illustrated in the following diagram.


For a PDF version of this diagram please click on the link below:

FC_TAX_Town regeneration case study diagram

Site assembly

N’s scheme involves a large area extending out from the town centre, and consisting of derelict land, car parks, some workshops and warehouses and a couple of streets of run-down housing.

The Council currently owns parts of the site, although some of this is let out to tenants. N will take responsibility for site assembly and:

  1. N will negotiate to acquire freehold interests on the site, other than those held by the Council, and to buy out leaseholds

  2. N will then transfer the entire site to the Council, for