A: Client’s sale of the new builds will not qualify as a zero-rated supply as Client does not have ‘Person Constructing’ status (see VAT Notice 708 para 4.5). Selling the residential properties on will now be exempt income, so agent fees incurred will be exempt input tax so irrecoverable (unless Client meets the Partial Exemption De-minimis limits per VAT Notice 706 para 11).
If Client had been sold partially completed dwellings with Client finishing the build on the dwellings to completion, then they would be able to zero-rate the sale as they would have person constructing status.
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