Vehicles for property development and investment—VAT implications

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:

Vehicles for property development and investment—VAT implications
Why does this matter?
Companies
Registration and option to tax
Shares
Contributions and distributions
Contributions and distributions for no consideration—the rules for gifts
Partnerships
Registration and option to tax
Shares in the partnership

More...

Contributions and distributions
Partnerships as occupiers
English limited partnerships
Registration through one general partner
Other cases
Other limited partnerships
Limited liability partnerships and real estate investment trusts
Co-owners
Example
Joint ventures
Neither party has an interest in the land
One party has an interest in the land
Both parties have an interest in the land
Interests in different land

This Practice Note is about the VAT treatment of partnerships, joint ventures and other entities in the context of property development and investment. It considers:

•
companies, general partnerships, limited partnerships, limited liability partnerships (LLPs), real estate investment trusts (REITs), co-owners and joint ventures
•
which entity needs to be VAT registered
•
which entity should opt to tax
•
the treatment of transactions between the parties
•
contributions and distributions, and
•
dealings with third parties

Why does this matter?

It is not always apparent how collaboration arrangements should be dealt with for VAT purposes, and who needs to charge VAT to whom. In some cases the position is genuinely unclear, and the supplies for VAT purposes may not reflect commercial reality. It is important to ensure that contracts deal adequately with the position.

Companies

A company is a relatively straightforward vehicle for holding property, but the points provide a basis for comparison with other types of entity.

Registration and option to tax

A company is a separate entity from its shareholders. It is registered for VAT, and exercises any option to tax, in its own right.

Companies can be VAT grouped if they are under common majority control (see Practice Note: VAT groups).

The issue of shares in a company is not a supply for VAT purposes.

The disposal of existing shares might be a non-business activity (in the case of a private investor for example),

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