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Avoiding input VAT clawback on an exempt property sale.
A property developer trades as a limited company. The firm acquired land to build a large house for sale. Our client did not seek to disapply an option to tax the land before the price was agreed and the contract became legally enforceable. The vendor refused to disapply the option.
Eventually my client recovered about 84% of the input tax attributed to the land. The delay was mainly due to HMRC taking the view that the land was not in fact subject to a valid option to tax. The balance of the input tax remains in dispute but I am confident the First-tier Tribunal would rule in the client’s favour.
Because of the delays the original plan is no longer economically viable. Further the bank...
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