Our Ltd Co has purchased a bare site with expired planning consent for a number of dwellings (previously an industrial site). We are incurring VAT on costs related to the purchase and for obtaining new planning consent. The Co is VAT registered. Our original intention was to develop the site and sell the finished dwellings. However, that may not now be the case and there are a number of options we are considering.
My understanding (from looking through previous discussions on this forum) is that:
1. If we develop the units and sell freeholds or on long leases then we can reclaim out input VAT and the sale of the dwellings will be zero-rated and no VAT will be clawed back.
2. If the develop the units and rent them out on short lets the the supplies will be exempt and we would need to repay any input VAT reclaimed.
3. If we sell the development land with residential planning consent then is that supply exempt or zero-rated? Can we reclaim input VAT on costs incurred to date (solicitors, architects, etc.)?
And finally, at what point does the "option to tax" come into this? Do we need to opt to tax in order to reclaim any of the input VAT in any of the above scenarios?
A flat developer.