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HMRC internal manual

VAT Registration

Voluntary registration: how to establish entitlement to register as an intending trader: traders who intend to make supplies of land and property

Where an intended supply of land or property would be taxable only if an option to tax were made, Departmental policy follows the Tribunal decision in Beaverbank Properties Ltd (EDN/02/150) VTD 18099. That decision concludes that the principles set out in Ian Flockton Development [1987] STC 394 should be followed. If, on the evidence presented, any reasonable person would have concluded that there was an intention to make taxable supplies (even if this required an option first to occur), the trader’s application to register should be accepted.

To determine whether a business exists in such cases, follow the guidance set out in VATREG22100.

To determine whether an intention to make taxable supplies exists, you need to understand the purpose behind the trader’s intended supply. In Beaverbank, the trader intended to purchase land and develop it into a shopping centre and pubs but, in the event, failed to obtain planning permission. The evidence before the tribunal included:

  • the trader’s parent company’s history - they had set up a number of speculative development companies and did not normally opt to tax until planning permission had been granted (the tribunal accepted that they were not simply delaying the decision to opt because their intentions were undecided)
  • the trader’s financial plans which made it clear the trader expected to recover VAT incurred on purchases
  • the fact of what was being proposed - we would expect a person who intends to construct a complex including a shopping centre and a pub to make an option and thus make taxable supplies.

If you have any doubts about a trader’s intentions in such circumstances you should consult the Land and Property Unit of Expertise - further contact details are available on their intranet page.