HM Revenue & Customs (HMRC) previously held the view, that the supply of a serviced building plot (bare land on which civil engineering works have been carried out to provide access to gas, electricity, water etc) consisted of two supplies: an exempt supply of land; and a standard-rated supply of civil engineering.
Following the recent Tribunal decision in the Lammermuir Game Services case, HMRC now accepts that the supply of a serviced building plot of land is a single, exempt supply of land, for VAT purposes, provided a number of conditions are met:
- The civil engineering work must be carried out in the course of construction of dwellings/buildings to be used for residential or charitable purposes;
- the civil engineering is closely connected with or facilitates the construction of buildings; and
- the construction of the buildings will follow on closely.
As a result of this change in policy, landowners will not be able to register for VAT unless they make taxable supplies.
It is essential that you seek appropriate professional advice to ensure your business doesn’t over pay or under recover VAT on civil engineering and construction projects.
If you need further information, please contact Vaughn Chown using the online form below.