VAT for Intending Traders

VAT Question

My client is a newly formed property development company and we have recently tried to register them for VAT as an “intending trader” but HMRC have refused the application, asking for proof of land ownership and a copy of Planning Permission, neither of which my client has yet. What other evidence can I provide to get HMRC to accept their “intending trader” registration?

VAT Answer

Land ownership, along with a related planning permission, are clearly definitive evidence of your client’s business intentions.

Without these you have to provide HMRC with a sufficient weight of evidence to satisfy them of your client’s intention to trade and make taxable supplies. There is no definitive list of what will or will not satisfy HMRC but the following documents could add weight:

• business plans that have been prepared;
• communication with investors or with financial institutions that are being canvassed to fund the development;
• documented meeting or other communication with the planning authorities in regard to the development;
• documented early discussions or other communication with architects or planning consultants in regard to the development;
• early tenders or quotes from building contractors in regard to the cost of the development.

Unfortunately the final say on whether or not to accept an intending trader VAT registration application is HMRC’s but the more evidence that you can provide them, the more likely they are to agree.

Tony Pocock, Vantage Fee Protect VAT Consultant