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A client is currently in the process of purchasing some land with planning permission for 2 residential properties. The client is a VAT registered Limited Company who are building contractors (insurance work not new build). They have found out today that the purchase is subject to VAT and therefore presumably there is a current option to tax. My client is purchasing the land as an investment and intends to hold onto the land and either a) build the properties themselves or b) sell the land on at a later date. Their question is whether the company can reclaim the VAT on the purchase. Presumably, to do so, the company will need to opt to tax the land themselves? If they decide to build the properties themselves they will be zero rated and therefore input VAT can be reclaimed on subsequent costs. If they sell before anything is built, they will need to charge VAT on the sale. Is this correct? I presume also that stamp duty will be payable on the gross amount (including VAT)? Any UK tax expert help on this will be greatly appreciated!

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