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Claim VAT on let if in VAT registered partnership?

I have a client who are a husband and wife VAT registered partnership. This partnership provides book-keeping services, office management and crop marketing services. Earlier this year the husband inherited his mum's bungalow, which already has a tenant. He has done all the probate etc. Given that the partnership is VAT registered, could he reclaim the VAT on repairs to let the bungalow on a de minimis basis? He intends on showing the rental income as part of the partnership income. The bungalow is only in the husband's name. Does this affect whether it is possible? Also are there any other implications of bringing the bungalow into the partnership?

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By mrme89
21st Nov 2017 14:01

What will be the VAT status of the residential letting?

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avatar
21st Nov 2017 14:20

As a residential property I assumed that it would be exempt from VAT

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to jenthepen
21st Nov 2017 14:30

So why would you be able to reclaim the input VAT?

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to Duggimon
21st Nov 2017 14:40

Go back and read the OP, looking out for the words de minimis.

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to Portia Nina Levin
21st Nov 2017 14:46

I could swear it wasn't there when I wrote that!

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By mrme89
to Duggimon
21st Nov 2017 15:06

I missed that too.

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By Ruddles
21st Nov 2017 14:25

"Also are there any other implications of bringing the bungalow into the partnership?"

Yes

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to Ruddles
21st Nov 2017 14:39

Even though they're husband and wife?

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By Ruddles
to Portia Nina Levin
21st Nov 2017 16:04

Especially because they're husband and wife ;)

The OP mentions nothing about other TAX implications. [EDIT - answered before seeing your post below]

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to Ruddles
21st Nov 2017 16:06

She probably gets half of everything anyway.

Apparently, wives are like hurricanes; they're all wet an wild when they arrive, but when they leave they take half the f***ing house.

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21st Nov 2017 15:14

VAT. You will possibly achieve what you seek, depending on the amounts involved.

IT consequences none, save that the wife will be taxed on her share of the income. NIC consequences none. CGT consequences none. IHT consequences none. SDLT consequences none (not even an awkward SDLT return if the property is unencumbered).

There may be non-tax considerations, but nothing jumps out at me.

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avatar
22nd Nov 2017 10:50

Thanks for your comments so far.

So it would appear then that some VAT could be claimed so long as de minimis and partial exemption rules are taken into account and the amounts involved work with that.

My other main question remains. In order to claim any VAT on the property does it matter that the house is only in the husband's name rather than jointly owned? As it is the partnership that is VAT registered rather than the husband, would these be treated as separate legal entities?

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