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Would a short letting of property deny LLP’s status of making taxable supplies?
A limited liability partnership (LLP) acquired UK land on which it intends to construct six dwellings to be sold to one or more third parties at a profit. It was expected that the LLP would grant a ‘major interest’ in the land thereby making taxable supplies. The LLP would register for VAT and recover input tax charged by the seller.
The intention is to let the apartments temporarily before selling them later when market conditions become more favourable.
Our adviser is concerned that the exempt supply of letting the property in the interim will jeopardise the current ‘making taxable supplies’ status exposing the partners to non-recoverability of the VAT paid on the land. She advises making a zero-rated sale of the property to NewCo which will then let and sell the units.
I am not convinced that the suggested transfer is indeed required and might be unnecessarily...
