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VAT on Property - How to make a Claim

Starting out in property development reclaiming VAT can be daunting. We’ve provided some helpful info to show you ins and out of VAT on properties. VAT Liability of the supplies made by the developer at the end of the development can vary depending of various factors:


  • Type of property – commercial or residential or mixed use

  • Type of grant – freehold, long lease or short lease

  • Whether the developer will opt to tax

  • Intended usage of property and the occupier VAT status

Input Tax is usually based on intention, which could change at a later date. Bear this in mind as you could incur additional cost or claim input VAT back. The swing could be significant and impact the viability of the project.

If there is a change in intention of use within six years at the beginning of the VAT period in which the original intention was formed then any VAT claimed/reclaimed will need to be adjusted according to the clawback/payback provision under Reg 108/109 of the VAT Regulations 1995.


Self Supply

Purchase or construction of a property can be zero rated if it is intended to be used for residential use or relevant charitable purpose. The recipient of the supply must issue a certificate stating that the space will be use solely for residential or charitable use.


If the use of the property changes within 10 years from completion then a self supply charge will be due. The recipient will be required to account for VAT on the proportion of the building and remaining time that it will be use for a non-qualifying purpose.


As situation changes for land and clients change their mind the VAT treatment will need to be re-visited.  

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