How can a childcare facility mitigate vat

How can a childcare facility mitigate vat

Didn't find your answer?

I understand that a childcare business supplying exempt services cannot recover vat on capital or refurbishment costs. The only way is if they introduce some standard rated supplies then they might be able to claim a small amount on partial exemption. A lot of hassle probably for little gain.

They are looking to pay half the refurbishment of the leased premises. The landlord will also charge them vat on rent and service charges.

Is the only way to avoid the vat is for the landlord electing to opt out.

Replies (2)

Please login or register to join the discussion.

avatar
By User deleted
29th May 2015 14:13

One doesn't opt out

One opts in. And if the landlord has already made the election even if he could have been persuaded to revoke it, it may be too late to do so. (EDIT - or too early to do so: see comment below)

And opted or not, it is unlikely to have any effect on the refurb costs met by the tenant. (That may depend on the contractual arrangements and whether or not the tenant's costs were seen as a premium.)

Thanks (1)
avatar
By DMGbus
29th May 2015 13:48

Option to tax - 20 year opt out rule

This is a long shot.

If your landlord opted to tax in 1995 or prior then that's 20+ years ago and therefore the landlord COULD exit the option to tax ("revoke" the option to tax.
Whenever I advise landlords of commercial property about option to tax I always mention that once opted their property will be unattractive commercially to VAT-exempt and non-VAT-registered potential future tenants.

So, if "Plan A" was to get the landlord to opt out, but landlord doesn't wish to or cannot yet do so, you'll need to consider "Plan B" which is look for an alternative non-opted to tax premises where there's be no VAT on the rent.   If the childcare entity was a charity rather than a business a landlord's option to tax would be ineffective for a new lease to the charity.

There is a "Plan C" but, like "Plan A" and "Plan B" above this might not be practical - ask the landlord to use non-VAT-registered builders for the refurb work and these non-VAT-registered traders bill you rather than the landlord for your share of the costs.

 

Thanks (0)