Do the VAT property rules need simplifying?

Key points

• A government call for evidence suggests that fundamental changes are needed to the VAT rules for land.
• None of the main three proposals would achieve simplification.
• Any revisions should not lead to increased VAT in relation to residential property.
• Even though they are complicated tax advisers who deal with the rules regularly understand how they work.

In May the government launched a call for evidence (tinyurl.com/kjze9ez5) seeking views on whether the VAT rules for land and property need to be simplified.

Currently most supplies of land are exempt from VAT subject in the case of commercial property to the landowner or landlord being able to opt to tax. Some supplies are automatically standard rated such as new commercial buildings or specified typically short-term interests such as holiday or hotel accommodation and car parking. Some supplies in relation to residential property are...