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Backdate OTT / claim re-reg VAT

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My client Mr X bought the shares of company Y ltd last year. Y ltd is a property development company currently mid-project converting the top of an old building into a hotel. It has a long lease from a related ltd. 

The previous owners hadn’t VAT registered or OTT on the building. Can Y ltd register & OTT now & reclaim the (c£300k) VAT on the spend? If there’s a special rule about not claiming pre-ref Vat on OTT, can the OTT be backdated?

 Thanks 

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17th May 2019 09:51

You don't need to opt to tax since you will operate a hotel and make taxable supplies.
You can back date VAT registration for up to four years.

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to leshoward
17th May 2019 09:57

But he doesn't say that they will retain the property and operate it as a hotel (although the existence of a long lease might suggest that to be the case).

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to Wilson Philips
17th May 2019 10:02

I am unsure as to whether they will operate the hotel themselves, or sub-lease to a related company who will operate.

If the latter, they will need to OTT won't they? That would then draw us back to my original question ...

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to atleastisoundknowledgable...
18th May 2019 11:45

If they intend to sub-lease, then the OTT will probably work. But this is one of those instances where paid-for professional advice is essential.

(We vatties have seen too many taxpayers suffer large assessments and penalties over option to tax errors!)

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to atleastisoundknowledgable...
18th May 2019 12:19

atleastisoundknowledgable... wrote:

I am unsure as to whether they will operate the hotel themselves, or sub-lease to a related company who will operate.

Best to find out before you give advice on the option to tax.

There was somebody on here last week who only had eyes for the VAT input tax on her husband's van and no regard at all for the future. The immediate repayment prove to be a big mistake.

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