Andrew Needham considers when is the best time to register for VAT if a business is involved in property transactions.
Registering for VAT as early as possible can improve and avoid problems later on. A business does not have to wait until it actually starts trading before it registers for VAT – it can register as an ‘intending trader’ at the start, or even before the construction phase of the development begins.
Residential developments
If a business is constructing new residential property or converting commercial property into residential use with the intention to sell it (or grant a lease of more than 21 years), it will be making a zero-rated taxable supply and will be entitled to register for VAT and recover the VAT on the associated costs.
Once it is registered for VAT, it can recover VAT on the construction costs, materials purchased in
