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 themain rules:
if thebusiness makes supplies of land and property that are liable to VAT, it will be able to recover all of theVAT incurred on costs directly associated with theland and buildings
if thebusiness makes exempt supplies of land and buildings, it will not be entitled to recover any VAT incurred on costs associated with thetransaction
if thebusiness makes supplies of land and buildings which are liable to VAT and exempt from VAT, it will only be able to recover theVAT incurred on costs associated with thetaxable land and property transactions. The business will be required to undertake a partial exemption calculation in order to determine therecoverable VAT incurred on costs. Please see thePartial 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 theSupplies liable to VAT at thestandard 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 thesupplier opts to tax. A business can only recover VAT on costs if it intends to make taxable supplies of theland and property.
If thebusiness can clearly demonstrate that it intends to opt to tax but has not done so yet, HMRC will allow thebusiness to recover VAT incurred on
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