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bigduckontax
bigduckontax, Accountant
Category: Tax
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Can you advise if a commercial property is bought

Customer Question

Hello
can you advise if a commercial property is bought that is existing empty office space and it is demolished and New apartments built (more than 30) would the developer be exempt from VAT or able to reclaim the VAT back ?
London area property
Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer and pleased to be able to help you with your question. No, the developer would not be exempt from VAT as this sounds like a zero rated supply [even better!]. Here is the Gov UK guidance on the subject: What counts as new For work to be zero-rated for VAT, it must qualify as a genuinely new, self-contained house or flat. This means:it’s self-contained - there aren’t any internal doors or connections to other houses or flatsit can be used independently of any other property, including businessesit can be sold on its ownit has proper planning permissionany existing buildings on the site have been demolished completely to ground level (unless you’re extending an existing building to create a new house or flat)''I do hope that I have been able to impart some good news.
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Customer: replied 2 years ago.

Brilliant thanks very much

Customer: replied 2 years ago.

Hello

could I ask another question on this - looking at the sales details there remains an element of commercial office on the new build and it does say " the property is elected for VAT "

if this is the case is there a simple "un electing it " or am I just wishful thinking

Expert:  bigduckontax replied 2 years ago.

It would appear to be covered by the second condition viz:

'it can be used independently of any other property, including businesses'

However, I would be inclined to cross examine the vendor on exactly what is meant by 'elected for VAT' In certain circumstances this is possible. It is equally possible that purchasers not registered for VAT will simply walk away rather than pay an extra 20% on the purchase price!

Thank you for your support.