VAT application on off-plan property booked in 2016

[Ahfad Khan]

Hello All,

I booked an off-plan serviced apartment unit in 2016.
The unit was supposed to be handover by Dec 2017.
I fully paid the purchase price to the builder in 2017.

Now builder is handing over the unit in 2018 and asking me to pay 5% VAT.

I understand that being a serviced apartment this unit comes under commercial property. And VAT is applied on commercial properties.
However, the deal was done in 2016 and I fully paid the purchase price in 2017.

So, I believe VAT doesn't apply here.

Does anyone here a insight on this? Please share your thoughts.

Thanks.

 

[FWL]

Has there been a change in the rate of VAT charged since you paid up and the property was handed over? To me it seems as though you have stuck to you side of the bargain and if the extra VAT is a consequence of the builders delay then that is his problem, not yours. If the VAT was missed off the original price or perhaps the builders own VAT situation has recently changed then again that is not your problem.

 

[Ahfad Khan]

Thanks for your response.

Unit is going to be handed over in 2 weeks time.

There is clause in SPA (Sales and Purchase Agreement) which says the builder may delay the handover for 1 year without penalty.

There is also a clause in SPA which says the purchase price Excludes VAT. And incase VAT is imposed by the government then purchaser would be responsible to pay VAT.

My point is when I booked this property (Dec 2016) there was no VAT. And builder was supposed to deliver in Dec 2017. The Oqood (registration with DLD) was also done in Dec 2016.

Is there anyway I could contact DLD and get an official response on this?

 

[realdeals]

I would take legal advice on this one - I suspect the small print in the contract is so much in favour of the developer that it looks as though you might not be able to avoid the VAT payment. Speak to a solicitor, show them the contract and gives them a timescale of events.

 

[diyhelp]

How did you get on with your VAT issue? I can only imagine that there will be many more people in a similar situation who would be very interested to learn the outcome.