VAT Partial Exemption - When House Builders Let their Dwellings Before Selling Them

VAT Partial Exemption - VAT adjustments when house builders let their dwellings before selling them.

The residential property market is slowing down, and because of this some house builders are deferring their intended sales of dwellings and temporarily letting instead, this lead to them becoming partly exempt.

A partly exempt house builder might have to:

• adjust the VAT previously recovered on his submitted VAT returns
• restrict the VAT to be recovered on current and future VAT returns
• both adjust VAT previously recoved and restrict current and future VAT recovery

The amount of ‘exempt input tax’ related to their temporarily lets for most house builders is going to be small (or de minimis) and as a result they can continue to recover all of their input tax; but they must check to avoid VAT mistakes.

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