VAT non business use on holiday accomadation
Individual acquires new holiday home which will be let to public plus some private use. On registering for VAT, input tax recovery on purchase made based upon business use, ie non business part not recoverable. Alternatively under Lennartz method all input VAT recovered at the outset and quarterly adjustment made over 10 years based upon non business use each quarter. If the property is made available for letting all year but is actually only rented for say 8 months and so individual uses for the other 4 does that mean 2/3rds VAT recoverable? If property lay empty instead does that then mean that all VAT recoverable as no non business use?
Any comments appreciated.
VAT on Holiday Home
I strongly suggest you speak to a VAT expert - the VAT regulations surrounding property are complex as there are many items which you cannot reclaim VAT on even if the property was fully fully let out for business use as it can be disallowed.
As an example you can claim VAT for repairs and replacements but not for improvements. Technically this means that if you replace a kitchen consisting of 3 base units with a kitchen consisting of 4 base units, VAT is reclaimable on the 3 replacements but not the 4th as it is deemed an improvement. You will then have to disallow the private element on the 3 replacement units.
I said it could get complicated!