New VAT rules on property sale

[nimart123]

Hi everyone,
CAN someone advise on the new VAT rules regarding sale of a property.

This is the scenario:
A site was purchased and a house built nearly 4 years ago as main residence.
This is now to be sold before the 5 year time frame. -
Does this mean it is classed as a "new" house and therefore sellers must pay vat on the sale?
NO VAT was claimed back from direct labour or purchase of site when it was originally purchased. Sellers did not register for VAT when buying site or building house as they didnt think they had to.


Thank you

 

[Magunn]

Sorry, cant help you on your query, but you do raise a genuine problem that has contributed greatly to the Black market in this country - one off houses, paid for by self builders using direct labour. Because the mortgage drawdown is paid into the mortgagee's bank account, he/she can spend it as they like, i.e. paying cash to the man in the van to do the blocklaying, plastering etc to their new house. These tradesmen have charged ridiculous sums for their piece of the action, have bought jeeps to carry their few tools around, work ridiculously short hours, miss days whenever the mood takes them, and all because they were being overpaid in cash.

All revenue had to do was ensure that a mortgagee had to make a return showing construction costs on their new asset. This would have caught all the cash merchants in the building game, and would also have provided accurate data in relation to new builds etc.

Any views????

 

[Simeon]

Yes, quite a few! As a tradesman with 37 years experience I find your mail strange. Butchers, grocers, barbers etc get paid cash - do you also believe that they don't pay tax. If you live beyond your means (declared income) you will have the revenue after you pdq. Lots of workers have jeeps because they look better than vans. You get the same allowance. So, what really is your gripe?

 

[The Intern]

Assuming its a residential property and the sellers acquired/developed a house which they used in a private capacity they would not have been entitled to reclaim any VAT on acquisition/development. Consequently, the property is not in the VAT net and the sale would not be in the course or furtherance of business.

As a by the way, the new 5 year/2 year rules do not apply to residential property.

 

[ubiquitous]

These tradesmen ... have bought jeeps to carry their few tools around,

Well at least they get some practical use for the jeeps, not like the yummy mummies you can see driving their kids to school in the cities every morning

 

[ubiquitous]

This would have caught all the cash merchants in the building game, and would also have provided accurate data in relation to new builds etc.

Is there a shortage of "accurate data in relation to new builds etc"?