Buying Land that is VAT Registered

davidmcn

rtho782 wrote: »

As per the link I posted, land transactions are not eligible for VAT.

They are if the owner has opted to waive the VAT exemption. From your link:

You can opt to tax land (including buildings). Once you have opted to tax any supplies you make of the opted land will normally be standard-rated. Please read Notice 742A Opting to tax land and buildings for more information.

But, as long they bear in mind the extra 20%, I can't see it matters here unless the OP is competing against a buyer who is VAT-registered.

booksurr

rtho782 wrote: »

How is land vat registered? Businesses are VAT registered, not land.

Land transactions are usually VAT free.

https://www.gov.uk/government/publications/vat-notice-742-land-and-property/vat-notice-742-land-and-property

sorry no, you have not understood that the vendor has "opted to tax" and therefore yes, they do have to charge VAT. You need to read VAT 742A not VAT 742...
https://www.gov.uk/government/publications/vat-notice-742a-opting-to-tax-land-and-buildings/vat-notice-742a-opting-to-tax-land-and-buildings

Your interpretation of "land" is also incorrect, the reality is that land means land, the legislation then clarifies what that means if the land has features such as buildings on it, but fundamentally land is land (with or without buildings)

"When you opt to tax, you can specify an area of land or a ‘building’. Commonly, you will specify a ‘building’ because that is the prominent feature of the land."
...
"If you’re opting to tax discrete areas of land HMRC suggests that you send a map or plan clearly showing the opted land with your notification."

Given the OP is purchasing the land "merely" to use as garden, it does not fall within one of the exemption categories (for example land sold to a private individual to build a house on the land), so it is correct that the company must charge VAT on the selling price.

It is therefore entirely down to the OP how well he can negotiate a VAT inclusive price....

booksurr

Oli_Jones wrote: »

Thanks all.

Daveyjp, if it is, do I pay the VAT on top of purchase price? Can I claim it back?

Oli

no you cannot claim it back since "you" are not yourself VAT registered. Don't even go there for 1 second with the idea of buying it using a VAT registered entity since that is the whole point of opting to tax in the first place, it means that the purchase VAT can be reclaimed but means you must charge VAT when you sell. The land owner can revoke the option to tax,, but only in specific circumstances and time scales. i did it once for a village hall where we had recovered huge amounts of input VAT on the refurbishment costs but did not want to have to then charge VAT on the hall hire fees so revoked it. That takes a fair bit of doing !

Also, very obviously, the owner will then be the VAT registered entity which will not have the sort of tax exemptions that you will get as a private individual selling a house and its garden.

rtho782

Why would anyone choose to charge VAT on a land sale?!

davidmcn

rtho782 wrote: »

Why would anyone choose to charge VAT on a land sale?!

So they can reclaim the VAT they've spent on it.

martinsurrey

rtho782 wrote: »

Why would anyone choose to charge VAT on a land sale?!

If you sell land without an option to tax on it you cannot reclaim your input VAT.

Large developers incur a large amount of VAT (design fees, office fees) If they opt to tax they can reclaim this VAT, selling new build houses are Zero rated, so its of no consequence to residential buyers, but a MASSIVE issue for the builder.

Unfortunately the OP seems to be buying a little ransom strip on opted land, and will be charged VAT, which they wont be able to reclaim.

OP, get it confirmed that it is VAT inclusive.

all of the contracts I see are <purchase price> + all applicable taxes.

Miss_Samantha

It should be noted that all prices for consumers contracts as inclusive of VAT unless explicitly stated otherwise (which they shouldn't).

So, as it stands, "pay us £x" implies that the price is inclusive. Of course, it is best to make it explicit to avoid unnecessary arguments re. the contract or payment.

davidmcn

Miss_Samantha wrote: »

It should be noted that all prices for consumers contracts as inclusive of VAT unless explicitly stated otherwise (which they shouldn't).

So, as it stands, "pay us £x" implies that the price is inclusive. Of course, it is best to make it explicit to avoid unnecessary arguments re. the contract or payment.

Contracts for the purchase of land aren't "consumer contracts". They will generally be explicit about how VAT is meant to be treated.

Miss_Samantha

davidmcn wrote: »

Contracts for the purchase of land aren't "consumer contracts". They will generally be explicit about how VAT is meant to be treated.

"Pay us £x" does imply an all inclusive price and OP is a consumer, not a business/trader. If VAT isn't explicitly excluded then OP is entitled to consider it included.

As said, contracts should be explicit for this very reason and for clarity.

I'm sure it will be explicit on the contract but, as said, OP should have everything clarified before that point.

martinsurrey

davidmcn wrote: »

Contracts for the purchase of land aren't "consumer contracts". They will generally be explicit about how VAT is meant to be treated.

Miss_Samantha wrote: »

"Pay us £x" does imply an all inclusive price and OP is a consumer, not a business/trader. If VAT isn't explicitly excluded then OP is entitled to consider it included.

As said, contracts should be explicit for this very reason and for clarity.

I'm sure it will be explicit on the contract but, as said, OP should have everything clarified before that point.

Can you quote us the regulations you are refering to that apply to the purchase of land.

The CCR explicitly exclude contracts for immovable property, such as land.