Housing slump sees property developers take rental VAT hit
HMRC advice says any VAT claimed back on new homes needs to be repaid if the house is rented instead
House builders unable to sell properties due to the housing market downturn
could face a hefty tax bill if they decide to rent out new homes,
HM Revenue & Customs
has warned.
Advice published by the government body warns developers may have to pay back
VAT they have reclaimed due to the different treatment of VAT on selling and
letting properties.
HMRC claims than many house builders will not be affected as there are
exemptions for small amounts of tax involving temporary lets.
But some property developers could be liable for repayments before any
rental income has been accrued, as the trigger for repayment was the intention
to rent, reports the
Financial
Times.