The basic principals explained in
PE1000 and
PE3000 will apply equally to land and
property businesses.
Rather than buy or sell a property, it might be that a
business buys or sells a company that owns a property. Such
property owning companies (often referred to as special purpose
vehicles) might be wholly owned subsidiaries, nominee companies
and/or trusts. Property developments are increasingly undertaken
through joint venture “partnerships”, set up
specifically for a particular project in conjunction with others
willing to share some of the risk. Accordingly, the method also
needs to recognize that input tax incurred on property transaction
arrangements might not always be reflected in supplies made by
companies within the VAT Group itself.
While the standard method is relatively simple to use it is
not sophisticated enough for many Land & Property businesses.
It relies on using values which can in some cases fluctuate and it
does not adequately take into account some situations in which
businesses find themselves. Therefore, most land & property
businesses adopt a special method that more closely reflects their
activities.
