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Poleaxed plans

01 October 2013
Issue: 4422 / Categories: Forum & Feedback , VAT

A residential property was purchased and plans were drawn up for its demolition and the construction of three new homes. But planning permission was refused, so the original property will be retained and one new home built instead

My client is a VAT-registered property developer who purchased a house for £275 000. His plan was to demolish this property and to build three new homes on the land which he then planned to sell.

He has undertaken considerable preparatory work employing architects surveyors structural engineers etc. Plans were drawn up and planning permission applied for. He has reclaimed all of the VAT incurred to date on professional fees etc.

Unfortunately planning permission has been turned down. As a result he has now submitted a new application to retain and extend the original property and to build one new home on the land. Once completed both properties will be sold.

Can readers provide advice on the VAT issues going forward? Is there any problem with VAT that has been claimed to date? Obviously the client’s original intention was well documented.


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