Supply of a Development Site

Cavendish Green Ltd appealed to the First-Tier Tribunal regarding HMRC’s initial decision to disallow input VAT recovery in relation to a development site. The Appellant argued that, due to the construction of a boundary wall on the site, any onward supply would be liable to the zero-rate of VAT as part of a development which was to include a ‘building designed as a dwelling’ under VATA 1994 Schedule 8, Group 5.

 

However, on considering the notes to this legislation, it is specified that planning consent must be in place and that its construction must have progressed to the extent that it was in accordance with the obtained consent. At the time of supply of the development site, no planning permission had been obtained and consequently, the supply made was an exempt supply and not a zero-rated supply as argued. Due to this ruling, the Appellant was unable to recover input VAT incurred in relation to the site.

 

This case highlights the importance of obtaining planning permission at the appropriate time and the need to clarify the VAT liability of the supplies being made by your business, particularly if these supplies may qualify for exemption as this would restrict the businesses ability to recover input VAT.

 

To discuss these issues, please call out free VAT helpline and speak to one of our experienced consultants.

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