VAT on Commercial Property altered to mixed use
I am trying to understand the VAT position on a property as follows.
Property has been owned for some time. Originally both floors of property were offices, property was opted to tax and VAT charged on rents etc.
One floor has now been converted to residential and let out as flats.
I understand from looking into this that the rent charged on the residential part is exempt from VAT and that therefore the input VAT on a proportional part of the expenditure in relation to the property should be non-recoverable, and that (in the absence of any specifics) the best way of apportioning the expenditure is on a rental income basis.
What I don't know is that if the property is opted to tax originally, whether the VAT incurred on the works to alter the property from commercial to residential can be recovered? And also if we need to notify HMRC in any way that the income is now partially exempt from VAT.
One further question. The electricity is invoiced to the Landlord and charged out to the tenant. Should we a) claim the input VAT on the electricity and then invoice out to the tenant plus VAT on a proper VAT invoice, or b) not claim the VAT on the electricity and then invoice out the gross cost to the tenant. The net effect is the same, I just wonder which is the correct treatment.
Any help would be very gratefully received - and if you can quote the relevant guidance that would be even better. Thank you.
- Taxfiler - SA100 - More efficient? 725 5
- See you all on the other side 739 6
- 12Pay 508 2
- dividends 711 2
- R&D 357 1
- Quarterly Reporting - The Logistics 1,216 17
- Auto enrolment contribution rates 473 3
- How long are you waiting for appeal reply 463 4
- Borrowing money to loan to company 416 1
- Mother as Guarantor for Son's mortgage 573 5
- Seeking a tax case 678 9
- When do we qualify for state pension? 539 4
- Companies house strike off 637 3
- Tax treatment of alterations to property 475 2
- Moving to the cloud 777 9
- Iris open space/doc exchange for SATRs 225 2
- How much to charge for payroll? 939 16
- Unincorporated charity transfer to CIO 232 4
- BTC vs Digita 1,113 29
- Has anyone tried calling HMRC to get tax on dividends put in code? 530 4
- HMRC Joint Filing 574
- Capital Contribution towards a company car 428
- Capital Reduction & Impact on EIS Shares 378
- IRIS and FRS 102 362
- National Minimum Wage issue on Directors joining a Workplace Pension 343
- Capitalising Finance Lease 342
- Marginal rates of tax 331
- USA help 327
- Class 2 NI 321
- Dormant company accounts under FRS 102 305