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Tax – VAT

DIY scheme – planning condition

 A self-builder of a dwelling is entitled to a refund of any VAT. But, this only applies ‘if the separate use or disposal of the dwelling is not prohibited by the term of any covenant, statutory planning consent or similar provision’.

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VAT groups – TOGCs

The general rule used to be that you ignore what happens inside a VAT group and pretend it does not happen. This explains why a letting to a group company inside the same VAT group was not enough to give you a transfer of a going concern (TOGC) and the advantages that flow from it.

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Conversion – ‘non-residential’

The conversion of a ‘non-residential part of a building’ into residential use will usually attract zero rating. But, a recent case shows that it might not be so straightforward if the premises are mixed use.
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Phased development – original building?

Building developments are often phased. When that happens, it is important to consider the VAT consequences of the phasing, because it may inadvertently lead to the loss of VAT zero-rating.

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TOGC – ‘genuine’?

TOCG relief has recently been denied because the property structure set-up was not ‘genuine’.

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Lease surrender – L’s premium

What is the VAT position if L pays T to surrender the lease? The answer is that no VAT will have to be paid by L – unless T has exercised the option to tax.

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TOGC – lease surrender

HMRC has finally conceded that the surrender of a lease subject to a tenancy can constitute a TOGC (and so no VAT will have to paid). At the same time that will result in an SDLT saving for the L who accepts the surrender.

    
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Overpaid VAT – interest

The High Court has held that HMRC should refund overpaid VAT with compound interest (not simple interest). This decision will inevitably be appealed to the CA because of the sums involved – it could cost HMRC many billions (Littlewoods alone is claiming £1bn on repayments going back many decades). Littlewoods v HMRC [2014] EWHC 868 (Ch)

 

Sports clubs – non-members

HMRC has traditionally taken the view that if a non-profit-making organisation makes supplies that are closely linked to sports or PE then those suppliers will be exempt from VAT, provided the supplies are made to members of that organisation. Thus, in a golfing context, tee fees charged to members are VAT-exempt, but non-members have to pay full VAT.

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VAT recovery – ‘economic’ test

Does the right to recover VAT (the right of ‘deduction’) apply between unconnected businesses?

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