An alternative to the ‘golden brick’ scheme
By Niall Murphy
It has generally been the case that when house builders are selling partly completed dwellings to registered social landlords (RSLs), they try to structure the sale so as to constitute a ‘golden brick’-type transaction.
Golden brick is a term of art and means that where the conditions are satisfied, the house builder can sell housing developments to RSLs that have progressed beyond the golden brick stage at the zero rate of VAT. This means that the house builder is entitled to full recovery of VAT incurred on costs associated with the development and the RSL acquires the development at no VAT cost.
HMRC accepts that at the point the first brick is laid above foundation level (the golden brick), the house builder can zero-rate the sale or long lease in land that will form the site of a building provided a building is clearly under construction…
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