VAT implications of exchanges of land
Produced in partnership with Martin Scammell
VAT implications of exchanges of land

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

  • VAT implications of exchanges of land
  • Why does this matter?
  • What to look for
  • How much VAT is due?
  • When is the VAT due?
  • Example—land in exchange for land
  • Example—rent-free period in exchange for works
  • Example—land in exchange for works
  • Example—demolition services

This Practice Note is about the VAT implications of barter arrangements involving land and buildings.

Why does this matter?

Barter transactions can create unanticipated VAT liabilities and may have other unwelcome VAT consequences, of which the parties need to be aware. VAT clauses in contracts relating to transactions of this type may need careful drafting.

What to look for

The issues arise where consideration for a supply is not, or is not wholly, in money. So the monetary consideration is likely to be less than one would expect. In a commercial context, transactions that are described as gifts, or are for a low price or a low rent, will usually be part of a barter, whether or not the parties have thought of it in those terms.

Some barter transactions, such as an exchange of one plot of land for another, are easily identifiable. Other cases are less obvious. To consider the position, you may need to break a deal down into its constituent parts, and consider whether one party would be doing X, if another party was not doing Y.

How much VAT is due?

VAT is due on the consideration for a supply, whether or not this is paid in money. Suppose that a piece of land is exchanged for goods, and that a sale of