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Simplifying VAT on Land?

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HMRC are requesting opinions views on the potential ways to simplify the VAT rules for land and property.

The consultation is split into two sections:

  • the first section considers the history of the VAT land and property rules, explaining how they have become more complicated over time and sets out the factors that are driving the need for simplification; and
  • the second section discusses possible solutions for the issues caused by the current rules.

Views are being sought on three options which were recently considered and rejected by the Office for Tax Simplification (OTS):

  • removing the ability to opt and making all relevant transactions exempt;
  • removing the option to tax and making all land and property taxable at a reduced rate; and
  • making all commercial land and property taxable at the standard rate with an option to exempt.

It also suggests the rules could be simplified by

  • defining short term or minor interests as subject to VAT
  • by making most supplies subject to VAT, with a few specific exemptions
  • by linking the VAT status of the land to those registered at  the Land Registry

“The land and property VAT rules are complex and any move to simplify them would be welcome. I would encourage anybody with an interest in the sector to respond to the consultation,” says Simon, VAT Partner.

The consultation runs until 3 August 2021 and you can either register your own responses or contact BHP to coordinate your views with ours.

Further details can be found at