Commentary

V7.384 Disadvantages of opting to tax land or property

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.384 Disadvantages of opting to tax land or property

Part V7 Tax planning | Commentary

V7.384 Disadvantages of opting to tax land or property

There are two main disadvantages of opting to tax an interest in land or property:

  1.  

    •     a tenant who is paying rent to use the property may not be able to recover any VAT charged as input tax, and

  2.  

    •     the purchaser of the land or property may also be unable to reclaim VAT charged as input tax

See Example 3 for an illustration of this point.

Example 3

ABC Properties now decide to sell the property in Example 2 for £800,000. Unfortunately, they have forgotten that VAT is chargeable on the proceeds of

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