I have a client who has a limited company, husband owns 80% of shares, wife 20%. Husband and wife also own a commercial property personally with an option to tax on it, which they rent to the limited company. The husband and wife are registered for VAT for the purposes of renting the property to the limited company. As my client's business has reduced significantly they have decided to disincorporate and the husband is going to continue with the reduced business as a sole trader. However, I am unclear what happens with the rental of the commercial property under these circumstances. Can anyone advise please?
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Commercial Property
If the partnership is continuing to rent the property but to the husband, instead of the limited company, then VAT will still need to be charged on the rental. If the husband's business is B2B, it will be worth registering for VAT, so that VAT on rent can be recovered.
But, given the various factors, there may be more VAT-efficient options to be considered. You should seriously consider seeking paid professional advice. (PM me if that would be helpful.)