VAT and industrial units

VAT and industrial units

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A friend owns and rents an industrial unit to his own ltd co. He is now looking to have a second unit built. Will the contractor who does the work charge him VAT or is it zero-rated? If the work is standard-rated, then I assume he will need to register for VAT personally in order to reclaim the VAT back? Does this involve opting to tax the property? If so, I assume he will have to charge the ltd co VAT on the rent for this second unit and also charge VAT on any future sale.

Any comments would be appreciated.

Thanks
Robert

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By User deleted
02nd Oct 2007 18:30

Frayed sew
The construction of a new industrial unit is going to be standard rated. To recover the VAT the owner will have to register for VAT. To be able to do that the owner will have to have the intention to make taxable supplies - this probably means opting to tax.

The implications are that he will have to charge VAT on rent and any subsequent sale - although if it was a transfer of a going concern and the purchaser put in an option that would be free of VAT.

It's just possible that the option might also affect the first unit. Depends on where they are in relation to each other. Or maybe I'm just being pessimistic.

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