property development


S

stephen T

I was previously self employed, now retired, and have moved home. I mention
that to explain why I have not approached my previous Accountant.

I am thinking of starting to work as a property developer, ( I was
previously a builder)

I have looked on the HMRC site and am more confused than ever.

Basically I anticipate buying 2 properties a year, completely refurbishing
them, and then selling them.

I will be paying builders to do all the work so will be paying VAT on their
bills, and on legal fees etc.

My turnover will require me to register for VAT ( I think )

If that's the case, and VAT is not payable on the sale of residential
property,( ? ) will it be a case of me simply claiming the VAT back.

or, more likely, have I got it all wrong?
 
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R

Ronald Raygun

stephen said:
I was previously self employed, now retired, and have moved home. I
mention that to explain why I have not approached my previous Accountant.

I am thinking of starting to work as a property developer, ( I was
previously a builder)

I have looked on the HMRC site and am more confused than ever.

Basically I anticipate buying 2 properties a year, completely refurbishing
them, and then selling them.

I will be paying builders to do all the work so will be paying VAT on
their bills, and on legal fees etc.

My turnover will require me to register for VAT ( I think )

If that's the case, and VAT is not payable on the sale of residential
property,( ? ) will it be a case of me simply claiming the VAT back.

or, more likely, have I got it all wrong?
If you are right about no VAT being payable on the type of property
in which you will be dealing, then there are two possibilities and
you will need to find out which of the two it is.

(1) It could be VAT exempt. In that case you will not need to register
no matter how big your turnover is, and would have no reason to register
voluntarily. You could not recover your input VAT (what you pay out on
your builders bills etc).

(2) It could be VAT-able but zero-rated. In that case you would need to
register and could recover your input VAT.

Option (1) seems likelier.
 
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Be very careful

Take, and pay for, professional advice. VAT on property and land transactions is one of the single most complex areas of the UK VAT system.

Also, depending how you are going to move your business forward consider the CIS rules, you may find you will be caught and will need to register as an employer for CIS purposes.

Again, take, and pay for, professional advice. If given correctly in the long run it will save you more than it costs.
 

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