VATDREG16100 - Stocks and assets on hand: land and property
Under paragraph 9 of Schedule 4 to
the VAT Act, land and property are treated as goods. As a result, VAT is
normally payable on such assets that remain on hand at the time of
deregistration – unless the trader qualifies for a relevant relief.
A common scenario arises when a trader has purchased land where the supply to
them was exempt, but they later opted to tax (i.e. waived the exemption). In
such cases, if no input tax was claimed, there is no deemed supply on
deregistration, and no output tax is due. However, if input tax was claimed,
there is a deemed supply and output tax is due.
Further guidance on this can be found in the VATSC - VAT Supply and Consideration
It’s also important to note that the trader may need to re-register for VAT and account for VAT on the eventual sale of the land or property, depending on the normal registration thresholds and rules.