Maria McConnell

Maria McConnell, Partner, French Duncan on how effective VAT planning is crucial with new business ventures and property development in Glasgow on the rise again and the emergence of smarter working spaces.

VAT plan for Success

I've worked in the world of VAT for more than 20 years and it never fails to frustrate me, interest me (thankfully) and sometimes confuse me.  It's rarely dull, though many might disagree with me on that point, but one thing that it very often can be, is overlooked; and often when it matters most.

The majority of my working life in VAT has been spent in Glasgow; a city full of contradictions, constantly changing and reinventing itself, at the same time as trying to keep hold of its heritage.  This can be seen via the constantly changing landscape of the city, new developments springing up on old familiar streets, most recently in the heart of the financial district alongside the Clyde.

Maria McConnell

When I look at the new Barclays office campus, I have no doubt that a high-profile development project such as this will have been planned in meticulous detail, where the financial and tax planning will have been carried out with as much attention to detail as the architectural planning was.  However, such attention to detail is not always in place and a surprisingly large number of development projects fail to plan properly, because they overlook any potential VAT impact until the 11th hour, which is very often too late.

All too often businesses big and small come unstuck by failing to look ahead and think about how VAT will impact on a project.  Overlooking or misunderstanding VAT is not limited to new businesses.  Many established businesses can fall foul of bad VAT planning, especially if they venture into an area of VAT that they are unfamiliar with.  A prime example of when good VAT planning is crucial is property development.

VAT legislation regarding land and property is one of the most complex areas of indirect tax, but many new or would be developers fail to take sufficient advice.  I would always urge a client that it is better to ask for advice, even if only to have your understanding of the VAT treatment of a transaction confirmed, rather than fail to take advice and have HMRC tell you later that you were wrong!  The hundreds of tax Tribunal cases in existence are testimony to this fact.

In recent months, despite the many challenges brought about by Covid 19, we at French Duncan have been pleased to see that client activity has continued apace, with new business ventures and property developments on the rise again.  Some of the changes brought about by the pandemic have resulted in changes to how and where we work; this in turn is likely to have an impact on how we choose to use our office space.  As well as assisting clients to obtain grants and loans to progress development plans, our VAT department is on hand to offer forward thinking VAT advice, whether that be how best to maximise VAT recovery and cashflow depending on how a project is structured, or advising on reviewing past transactions where VAT planning was not considered at the outset, to advise on any potential claw back of VAT based on current or future plans.

In the changing workplace landscape, landlords may find themselves rethinking their commercial properties to attract new tenants, who now demand a 'smarter working' office space.  Where once space was leased for years, new or micro businesses might be more attracted to short term lets, based on hourly or daily rates, where the space offered comes with access to facilities including gyms, cafes and wellness centres being offered as standard part of the leasing terms.  Developments like this, as well as more traditional transactions, require well thought out VAT planning to ensure businesses are VAT effective and efficient and, as far as the ever changing landscape of VAT legislation is concerned, as future proofed as possible.

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