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.
- AWeb - download file 201 4
- Director Drawings 220 6
- Incorporated when they should not have 293 9
- Accountancy Career 350 5
- Accounts Software 189 6
- Have I dropped a major clanger? 2,380 22
- Do I need to report this to SOCA 3,711 39
- Holiday Pay whilst on Mat Leave 125 1
- HMRC Agents Line 232 4
- calculation DTR restriction 99 1
- Company Director In Prison 475 11
- SMP reclaimable by employer 101 1
- Charity work 254 11
- Help with HMRC investigation 284 6
- Subcontractor and CIS Deductions made by Contractor 282 13
- Managing Employee Expenses 243 7
- Collection or business assets 119 1
- Tax position re this lease? 374 9
- Do I need a smartphone? 738 23
- Is compensation for surrender of a lease subject to VAT 111 2
- Property exchange - 8-year legal delay following fall-out 686
- Have you staged yet for auto enrolment? 529
- Cancelled 430
- Cancelled 366
- SAGE Payroll Data for Import to MS Dynamics AX 363
- Probiz 338
- Free-standing washing machine - unfurnished lettings 329
- Phishing emails purporting to be from CIPFA? 244
- Is this UK incapacity benefit taxable in UK or Jersey? 218
- Another HMRC computer glitch? 204