V6.321 Introduction

Property development

V6.321 Introduction

This section does not address the liability of the construction of property, except where a reference is required to make sense of an otherwise illogical or apparently contradictory VAT liability. For a detailed explanation of how VAT affects the construction industry, see V6.196–V6.201 Construction Industry.

What is property? Before considering this fairly fundamental point, it is necessary to take note of the decision of the CJEU in the case of Finanzamt Ülzen v Armbrecht Case C-291/92 [1995] STC 997, which dealt with the sale of a building comprising both commercial and residential premises. The national legislation required that the property be treated as a single item of property, a requirement which does not sit at all comfortably with the structure of VAT.

In its decision, the CJEU limited the extent to which national property law can determine VAT liabilities and the resulting fiscal effects of those consequences. Nevertheless, a taxpayer is able to rely on national law if the national VAT legislation is based on it and it is to the taxpayer's advantage to do so. This view was also exploited in the case of Aquarium Entertainments [1994] VATTR 61 (VAT Decision 11845), but interestingly enough was not followed in the case of Tall Pines Golf & Leisure Co Ltd (2000) VAT Decision 16538 although the

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