V6.271 Practical points
Professional fees on new building
When commissioning new building work, consider the use of a design and build contract (see paragraph V6.269 at “Design and build contracts” above) or a management contract (see V6.269 at “Management contracts” above) to avoid the loss of input tax on professional fees. If, for commercial reasons, this is not feasible, any objections might be overcome by entering into such a contract with a wholly owned subsidiary company.
When constructing a complex to be used for residential purposes only, try to ensure that all buildings are covered by a single planning consent to achieve zero-rated treatment on the construction costs of all buildings (see V6.269 above).
Recovery of input tax on capital expenditure, eg computer or telephone network, is limited to the partial exemption recovery rate. A cash flow saving could be achieved by leasing the equipment. Alternatively, the equipment could be purchased by a wholly-owned subsidiary company, which is separately registered for VAT, and
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