Notice 708 VAT
The company I work for owns a building which has been empty for over 2 years. (qulaifies for reduced rate VAT) We are a developer and intend to refurbish this property and sell it. I have been told by the VAT office that the way to deal with VAT is as follows:-
We are in effect self supplying. Therefore we have to invoice ourselves the cost of undertaking the work at 5% VAT and claim back any supplies at 20%. EG Invoice from A Ltd for bricks for £100 + VAT at 20% = £120. In our quarterly return we claim back the 20% (£20). We also invoice ourselves for the cost of those bricks as though we were a separate entity, but at the reduced rate ie £100 + VAT at 5% = £105. In our quarterly return we pay HMRC £5. In total a net reclaim of £15.
This is probably the third differering piece of advice we have received from HMRC, but in my view the most logical.
Please could someone advise / offer an opinion!