How Our Advice added £15K Profit to One development

As VAT consultants we regularly assist clients to resolve disputes with HMRC. However, we can and often do, provide advice to client’s that increases the profit that they will achieve from transactions such as property developments.

As a recent example, our client intended to purchase materials at 20% VAT and labour at 5% VAT to convert a property from commercial to residential which it would then let. The business intended to use the property for VAT exempt rental purposes so would be unable to recover the VAT incurred.  

The client was able to increase the profit it would achieve as a result of a VAT review by our team on a single development by £15K. This was achieved by using straight forward and non-aggressive VAT planning using a corporate structure that the client already had in place.

Put simply we were able to advise the client on how to change the structure of the transactions so that it would incur and claim VAT on costs in a business it already owned and then charge for the supply to the property rental business at the reduced rate of 5% VAT.  Structuring the transactions in this way did not avoid VAT and the supplies were made at open market value. Instead it ensured that the irrecoverable VAT cost to the property rental business was reduced.

In real terms the saving to the client on the conversion of one property was £15,000 VAT. The result for the client was a significant increase in the expected profit from the development and the result for us is a happy client!

Please give our free VAT helpline a call if your or your client are involved in property developments, we cannot promise that we will always identify significant savings but one brief call could result in a VAT opportunity being identified for you or your client.


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