Simplifying the VAT Land Exemption – Summary of Responses Published

13th January 2022

Simplifying the VAT Land Exemption – Summary of Responses Published

VAT Land Exemption

Following a call for evidence on “Simplifying the VAT Land Exemption” HMRC have published a summary of responses in November 2021.

The purpose of the call for evidence was to gather views and ideas from businesses on how this VAT exemption could be simplified.  It was recognised that the current complexity of existing VAT rules on land and property could be impacting businesses’ ability to operate efficiently within them.


The call for evidence was split into two sections:

  • Section 1 looked at the history of the land and property VAT rules and how their complexity had increased over the years
  • Section 2 discussed possible solutions to the issues caused by the complexity of the current rules


Currently supplies of land and property are exempt from VAT in many instances, but this is subject to a number of exceptions and notes that are hard to follow.  You can view full details on the government website here.


In total 73 responses were received in the call for evidence.  These are the highlights of the published summary.


  • It was recognised that the three previously proposed simplification options by HMRC are not viable and will not be progressed further
  • It was widely accepted that the current guidance should be simplified, though some rules were recognised as already working well and so consensus was that no major reform should take place, but rather a considered consideration with continued stakeholder consultation
  • Linking the VAT liability of interests in land to the Land Registry will not be taken further
  • Applying VAT to short-term property exploitation is to be explored further
  • Narrowing exemptions to exclude minor interest is to be explored further
  • The Option to Tax anti-avoidance rules were highlighted as requiring simplification, with current delays within the process and a lack of a central option to tax database exacerbating the situation
  • Mixed use developments and short-term arrangements such as conference facilities were highlighted as being overly complex and lacking clarity in terms of their classification


It would seem from the published summary of responses that HMRC will look individually at specific areas of concern highlighted, rather than a grand sweeping change to the VAT law, though no timescales have yet been given.  A working group has been set up to continue the project into 2022 with additional consultations being expected at each stage.


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All information correct at time of going to print/live and on the best knowledge and understanding of the author at the time. This article is for general information only and does not constitute financial advice or recommendations for individual circumstances. No responsibility is taken for any actions taken on the base of the information within this article.

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