The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
A business' ability to recover VAT incurred on costs associated with land and property will depend upon a number of factors, which are explained below.
The following provides an overview of the main rules:
if the business makes supplies of land and property that are liable to VAT, it will be able to recover all of the VAT incurred on costs directly associated with the land and buildings
if the business makes exempt supplies of land and buildings, it will not be entitled to recover any VAT incurred on costs associated with the transaction
if the business makes supplies of land and buildings which are liable to VAT and exempt from VAT, it will only be able to recover the VAT incurred on costs associated with the taxable land and property transactions. The business will be required to undertake a partial exemption calculation in order to determine the recoverable VAT incurred on costs. Please see the Partial exemption ― overview guidance note for more information
Notice 742A; VATLP22550
The following provides an overview of when VAT can be recovered before a business opted to tax.
Certain supplies of 'new' land and property are automatically liable to VAT. Please see the Supplies liable to VAT at the standard rate guidance note. Any VAT incurred on costs associated with supplies of taxable land and property will be recoverable in full.
However, many supplies of land and property are exempt from VAT and will only become liable to VAT if the supplier opts to tax. A business can only recover VAT on costs if it intends to make taxable supplies of the land and property.
If the business can clearly demonstrate that it intends to opt to tax but has not done so yet, HMRC will
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