Tax dodge of the week: save VAT on property conversion

05.10.2007

Most people who do up properties and sell them think that VAT planning has nothing to do with them because the sale of residential property is VAT-exempt (ie, you can‘t reclaim any of the 17.5% VAT charged by your builders), says The Schmidt Report. However, we’d be prepared to bet that an “awful lot” are missing out on “chunky” VAT reclaims, owing to one new rule in particular. Some years ago, in order to give housing supply a “shot in the arm”, the Government introduced a lower rate of VAT (5% rather than 17.5%) for various categories of conversion, including – probably most importantly – what is referred to as the “changed number of dwellings conversion”. 

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