Where a developer defers the intended sale of a dwelling and temporarily lets it instead, the developer will become partly exempt for VAT purposes. This may affect the amount of VAT it can recover on its costs.
The developer may have to adjust the VAT it has previously recovered on its VAT returns and/or reduce the VAT to be recovered on its future returns. However, if the amount of exempt input tax relating to the temporary letting is "de minimis", and the developer does not currently operate a partial exemption method, the developer can continue to recover all of its input tax.
Developers who are considering letting unsold dwellings should seek advice. Contact Vaughn Chown or your usual Vantis contact for assistance and the latest position from HM Revenue & Customs. Alternatively, please enter your details and submit the onlne form below.