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HMRC internal manual

VAT Land and Property

HM Revenue & Customs
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Business and non-business: property and business

Property dealing is the primary business activity for some taxpayers. However, for many others, property dealings represent a business interest in addition to their main business activity. The most straightforward example would be a sole proprietor with a retail shop, who also receives rental income from a flat above the premises.

The letting of property is a business activity for VAT purposes. This also applies to the sale of property that has been let and to the sale of any part of a business premises.

It is possible that a taxpayer may own a property that is managed by a property agent. Again, the taxpayer is engaged in a business activity and must declare the gross amounts receivable, not the balance after commission and costs.

Conversely, the sale of a taxable person’s private residence is not a business activity.