VAT & Conversion of public house to residential
The client purchased a public house from a brewery chain. The brewery charged VAT on the purchase price at 17.5% after deducting from charge, for VAT purposes, 10% to account for the residential element of the premises, i.e. VAT was charged on 90% of the purchase price. NB The pub had not traded for several months prior to purchase and also the property was only one of, I suspect, a 100 or so owned by the brewery and so did not fall for treatment within the transfer of a going concern rules.
The input VAT was claimed on the client's first VAT return.
The client has now ceased trading and the Final VAT return is due for completion.
The client has decided to retain the property and convert it to residential use ( for use by themselves) and local authority "change of use" has been applied for and granted.
Comments would be gratefully accepted with regard to the following:
1. Is VAT to be accounted for on the final return in the normal way by way of
market value of asset on cessation of trade.
2. No local estate agents were prepared to offer a valuation on the property
prior to change of use having been granted (as were the bank not prepared
to offer residential mortgage without the same).
A post "change of use" valuation has now been received.
The point to all of this is would it be it be acceptable to discount the valuation
provided to take account of the fact that the valuation would have been less on
cessation since no change of use had been granted. Local agents won't provide
an estimate of the then value and council took nearly 12 weeks to give consent. If
yes, how much is a sensible percentage discount.
Also note the pub & business had been up for sale for nearly 18 months prior with
no takers. The pub is opposite (15 metres away) from a derelict block of flats with
all the problems that brings.
3. If VAT is due in the normal way are there any reliefs available by way of reduced
rates,etc that can be utilised.
Due to the well publicised delays at VAT office concerning registrations,etc
the client has been fortunate in as far as as the final return actually arrived in the
same week as the change of use consent (i.e. 12 weeks after cessation ! ).
However the situation needs to be concluded and it would be nice to soften the blow of the VAT if at all possible.
References to relevant material would be greatly appreciated.
Many thanks in lieu of (hopefully) some informed replies.
- Salary Sacrifice andy subsistence payments 272 8
- Should training costs being reclaimed be deducted from gross or net salary 78 2
- Employment Allowance 315 3
- Any reasons for a dissolved company to comply with HMRC requesting Corporation Tax and Tax Returns 79 2
- RBS advising client they don't want his business 2,338 13
- Auto-enrolment staging dates, letters etc 118 4
- VAT FRS for a Formula 2 Racing Driver 101 2
- Overdrawn directors loan account. 928 21
- Can you have two types of sales? Sales with VAT and Sale without VAT? 355 9
- Company Structure 264 2
- The importance of Grammar 2,051 58
- Who is responsible for goods values for customs clearance? 40 1
- Accountant Specialization. 87 1
- Student Loan Box in Year Repaid 202 3
- What is the best acounting software for online international retail business? 247 1
- Director Liability 229 4
- Finding mobile numbers for clients we have lost contact with 395 5
- Travel and Subsistence Expenses 234 2
- Freelance/Employee 488 13
- 2 companies, one payroll 293 9
- Any knowledge of salesorder.com 400
- Chart of account segments; Balance sheet vs P&L 362
- Could and would anyone here carry out a hot file review of some non statutory audit work please? 341
- Electric Car 274
- S222 Charge 233
- IP trans to holding company 177
- Taxable Benefit for Director? 167
- Corporation tax penalties and fines on the CT600 158
- Software to Deal with Amazon and Ebay Sales 156
- AIA 153