opt to tax

opt to tax

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client looking to buy a property which has an "opt to tax" on it.  Would be obliged for confirmation or clarification and further info where applicable re the following points

- to recover the vat, client will have to be registered for vat.  However there will be a 3 month gap between purchase and commencement of trading. Will the client therefore register as at purchase date, as an "intending trader" so that vat on purchase and refit costs can be recovered in the first vat return;

- am I correct that the client will not inherit the "opt to tax" status of the property  ie the "opt to tax" status ends when the previous owner sells?

- as capital costs are not classified as pre-registration costs to be recovered in the first vat return, this does seem to confirm registering as at the date of purchase?

- the purchase price of the property will be over £250k so within the capital goods scheme - does this simply mean that the trade has to continue for 10 years to avoid repayment of any part of the input tax recovered on purchase?

all comments welcomed

Replies (2)

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chips_at_mattersey
By Les Howard
06th Feb 2015 16:09

Property with option to tax

(You should really be seeking paid advice on such a project)

The Option to Tax status does not automatically transfer to the purchaser. He has to make his own decision re the Option. The CGS calculation does apply for ten years from Completion. I would have to check about the effect of the empty period before occupation, and what impact (of any) that will have on the CGS calculation.

Capital costs are included within pre-registration costs, so be careful on your registration date.

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By shaun king
06th Feb 2015 19:10

Brave man!!

It is a brave man that accepts any advice on this forum when providing such limited background on the proposed transactions. I could give you three answers which might fit your circumstances, but there again they might not!!

As Les said you will need expert paid advice!!

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