Other supplies of land and property

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Other supplies of land and property
  • Beneficial owners
  • Joint owners
  • Compulsory purchase
  • Call and put options
  • Free supplies of land and property
  • Land and property owned at the time a VAT number is cancelled
  • Fixtures
  • Developers agreements
  • Mortgages

This guidance note provides an overview of the VAT treatment of some specific property transactions.

Notice 742 
Beneficial owners

From a pure VAT perspective, the beneficial owner of the property is the party which makes the supplies for VAT purposes. Therefore, if a beneficial owner receives the proceeds from the sale, lease or letting of land and property, it will be treated as a party that actually sells, leases or lets the property. This will be the case even if another party actually has legal title to the land and property in question.

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If the beneficial makes taxable supplies of the land and property, it will need to VAT register if it exceeds the UK VAT registration threshold. The beneficial owner will be responsible for opting to tax the property and for accounting for any VAT due on supplies made.

If the benefit accrues directly to the trustees, it is the trustees who should register for VAT as a single person if the value of their supplies will exceed the UK VAT registration threshold. For more information, see the Overview ― registering for VAT and VAT registration procedure guidance notes.

Please note that it is possible for the business to voluntarily register for VAT if it is making, or intends to make, taxable supplies but the value of those supplies will not exceed the VAT registration threshold.

Joint owners

HMRC has issued updated guidance in Register for VAT if you own land with another person  which is summarised below.

Of two or more persons are jointly making taxable supplies, then the terms of any agreement will determine how the person needs to register for VAT. It may be necessary for the parties to register for VAT as a partnership even if no formal partnership agreement is in place.

The parties

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