VAT on new build

[Chanmuganathan]

I need some clarification on following scenario I have to deal with:

A developer (New Build) raising an invoice to the potential buyer for demolition services. The invoice was zero rated. Is this correct?
The confusion I have is, they are not selling the new property or they are not invoicing to another developer building a new development.

[Generix]

Last time I looked at this is was a moot point as everyone involved was VAT registered (so it had VAT it could be recovered).

In any case I seem to remember that in order to zero-rate the supply it had to be supplied in the course of the building of the new build, that is as part of a construction contract if that makes sense. So in isolation it cannot be ZR.

Making it difficult for demo services on their own to be zero rated. Am sure there is case law around this.

the property gurus will be able to give you a much more concise answer than my drivel above.

[section 44]

Is it really demolition services (after all, the buyer doesn't own anything which is being demolished) or is it perhaps a deposit/exclusivity fee for the anticipated land sale (albeit quantified by reference to demolition costs)?

[Chanmuganathan]

I think, I need to explain a bit more.
Four neighbours get together formed a company to develop 10 properties on the land they own (demolished the old detached houses).
4 of the properties they build going to be owned by them and the 6 will be sold.
The company is receiving vat refund as its building new properties. This is going on for almost two years.
Some reason I don’t know why, the company raise a sale invoice to the partners (As partnership) for substantial amount with zero rated.

[section 44]

Some reason I don’t know why, the company raise a sale invoice to the partners (As partnership) for substantial amount with zero rated.

Presumably a VAT invoice for its zero-rated supply of construction services, against which the company is recovering the VAT on its attributable costs.

Presumably the company is charging the four individuals an arm's length price for its construction services and the company is paying tax on its profits.