VAT for Small Property Development Company

VAT for Small Property Development Company

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Hi,

I have recently expanded my property development and this has mean't I have had to set up a Ltd company and am struggling to understand where I sit with VAT. Please excuse my ignorance!

So, I have purchased a property with has a shop and two flats. All need a total refurb and I plan to sell the two flats and lease the shop. The combined sale of the two flats will exceed the £81K threshold, so do I have to register for VAT?

From the gov website, I am struggling to determine which is zero rated/expempt/5% urrghhh

Any help on what I need to do and how the VAT will work will be very much appreciated.

LJ

Replies (6)

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By duncanedwards
02nd Mar 2015 13:14

I wouldn't do it yourself. Get some professional advice - it's worth it.

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By awoodj
02nd Mar 2015 13:53


As above, I'd get some help, lots of things come into play. Owned in company or not, the flats are exempt but if empty for 2 years may be at 5% input tax, still most likely exempt sale. You probably need to register for and adhere to CIS. If the shop is being retained it will be treated differently and you can opt to tax which has pluses and minuses. Is the income trading or investment (or a mix of both) each with differing tax treatments and so on and so on. Lots of different factors to consider and more than can be dealt with here.

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By Tim Vane
02nd Mar 2015 14:09

If only there were some sort of professional person you could go to and ask questions like this, for a reasonable fee. That would be so cool.

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By lilyjames
02nd Mar 2015 14:11

Thank you awwodj and duncanedwards, yes I should get some advice and will get on to that.

I have managed to get up to speed with CIS and thankfully registered and ready to go!!

The shop will be retained but leased to another business so income from the shop will be rental income. We will also retain the freehold of the building.

Any recommendation for a Property Development Vat/Tax expert willing to provide infrequent advice ? happy to pay of course.  

 

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By awoodj
02nd Mar 2015 14:20

I'd consider Vat Woman's Guide to VAT and residential property development by Maree Stein as well as possibly some of the Tolley's property tax guides. Although you are partially commercial it will give you most of the aspects around what you are asking if you prefer to try he DIY route, I think Maree also offers a phone consultation for a reasonable hourly rate which might be worth using to confirm your conclusions.

There are likely quite a few on this board who could also advise, might be worth asking for someone in you area if you prefer face to face. In reality the best time to get this tax advice is before you purchase the properties but I guess it's a bit too late for that now.

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By shaun king
02nd Mar 2015 14:18

Exempt

The sale of the two flats is exempt from VAT as they were residential accommodation before the refurbishment. As the supplies are exempt they do NOT count towards the registration limit. The lease of the shop will also be exempt from VAT as you are not registered so cannot opt to tax the supply. If you opted and registered for VAT you can claim back the VAT incurred on the property refurbishment but the flats refurbishment.

That's a basic answer it can get more involved but that is for another day!!

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