VAT reclaimed on outbuilding conversion

VAT reclaimed on outbuilding conversion

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Farming (H & W p'ship) client has converted an outbuilding with the intention of letting it as a furnished holiday let (would also have been in p'ship) and have reclaimed the VAT on the conversion costs.

However now that the conversion and furnishing is complete, the wife has taken rather a shine to the new property and would like to move into it (along with husband of course), possibly renting out the farmhouse they currently live in or possibly passing it to their son who is currently an employee but will soon be a partner in the farm.

If they do move into the newly converted property will there be any implications regarding the VAT they reclaimed, or is everything fine because their intentions at the time were to let the property?

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chips_at_mattersey
By Les Howard
31st May 2011 17:46

Holiday Lets - change of intention

This is one of those awkward situations. VAT guidance does not particularly address such a situation. However, if there is clear evidence of change of intention (emails, etc.) then you should retain that in the Client file. Do check if there is input tax which would not be deductible in a new house (items which are not builders' materials).

(I am sure there will be some Direct Tax implications, too, but I only do VAT!)

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By PennyC
31st May 2011 18:49

Actually

The guidance is quite clear. Where an asset acquired for business use is put to non-business use - whether before or after the originally intended use has commenced, input VAT can be restricted.

 

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