We have a client who opted to tax a building in 2003. He claimed back vat of £18k.
He now wishes to deregister for vat, but I told him he may have to pay vat at the
current value of the property. I have heard that there may be a 10 or 20 year period
after which there would be no vat charge. Anyone know if this is true please?
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It is true
Unfortunately for your client it is the latter. (And he would need to actively revoke the option - it is not automatic.)
£18k?
What did he claim the VAT back on, was it the actual purchase of the building (£100k seems a rather cheap building), or was it refurbishment costs?
The building will only be accountable at deregistration if he was charged VAT (or acquired it through a TOGC) and recovered it on the actual purchase of the building. If the actual purchase was exempt and he only recovered on refurbishments etc then he won't need to account for VAT on deregistration, although the option will remain valid so if he makes further supplies of the builidng so he may need to reregister as they will be taxable supplies.
See: http://www.hmrc.gov.uk/manuals/vatscmanual/VATSC23600.htm for more info.
Agreed
I had made the assumption that the option to tax was made in order to recover VAT on purchase or secure TOGC treatment. It could have been made for other reasons. My fault for not stating my assumptions and the OP's fault for not supplying full information (as usual).