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.