The Choice Based Lettings schemes allow people applying for a home to bid for properties advertised by the local authorities. Most of the properties are managed by housing associations which have been charged VAT by local authorities for advertising vacant properties.
However, given their VAT status, housing associations had to bear the cost of it for several years. HMRC has now agreed that advertising cost forms part of a local authorities statutory obligations and is outside the scope of VAT. As a result of a recent ruling by HMRC, housing associations are able to claim back VAT charged by local authorities over the past four years. The retrospective four years VAT claim is likely to be a welcome help for housing associations.
Gerry Myton, VAT Partner at MHA MacIntyre Hudson says:
“It is an essential decision for the industry. Housing associations are already struggling to be efficient without much funds, lifting this tax barrier is an important sign that the Government is supporting their efforts.”