Capital goods scheme — valuing land and property

Produced by Tolley

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

  • Capital goods scheme - valuing land and property
  • What should be included
  • Costs that must be included in the value of constructed buildings or civil engineering works
  • Alteration, extension or annex
  • Refurbishments
  • Phased refurbishments
  • Regular or rolling refurbishments
  • Estimates

Capital goods scheme - valuing land and property

This guidance note provides details on how land and property should be valued for the purposes of undertaking a capital goods scheme adjustment calculation. This note should be read in conjunction with the Introduction to the capital goods scheme and Capital goods scheme - intervals and adjustments guidance notes.

What should be included

Businesses should only include the value of the actual interest granted in the land / buildings, excluding VAT, where the interest acquired was liable to VAT at the standard or reduced rates. The purchase of any interests that are zero-rated should be excluded. The cost of any fees associated with the purchase of the interest, such as estate agent or legal fees, should also be excluded.

See ‘Advanced Capital Goods Scheme Issues’ by Peter Hewitt in Tax Journal, Issue 820, 13 (16 January 2006).

The value of any rent or service charges should also be excluded unless the business meets either of these exceptions:

  1. the rent or service charge has been paid or is payable more than 12 months in advance

  2. the supplier has issued an invoice for a period of more than 12 months

If either of these exceptions applies, the business should include the value of the rent / service charge in the value of the land / property.

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