I act for a client that buys land and builds new dwellings to sell usually apartments. The VAT issues are straightforward because the sales are zero-rated so input tax is fully claimed on the expenses. However for one particular development a different business model is being proposed. They will sell a plot of land they own to a joint venture (JV) business at the market rate – they will own 50% of this business.
My client will then do the building work for the JV to construct 20 apartments invoicing the JV on a commercial basis. The JV will sell 12 apartments with long leases at the end of the project and then rent out the other eight apartments on a long term basis to tenants for use as their main residences.
Will the land sale create a partial exemption problem for my client? Should...
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