Hi
My client has incorporated a Ltd company and bought a retail unit. The company will own the property. The company had to pay Vat on the purchase and is looking to recover the vat by registering for Vat. The company intends to rent the building and charge vat on the rent. My understanding is that this cant be achieved by a simple vat registration and the company has to exercise option to tax. Am i correct?
Replies (7)
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Yes, the company must opt to tax the property in order to charge VAT on the rent. Is the whole property to be rented out?
Agreed- assuming that the retail property will be used for retail and not for some other purpose, eg storage.
Your client company is making Exempt supplies of rent so, yes, an OTT is required to recover any input VAT and this should be done before any supplies are made.
I take it there was not a tenant at date of sale? If there was ToGC may have been in point.
Just to mention I have done a sale/purchase (into SIPPs) with no leases extant at time of sale as a TOGC, however we did need to demonstrate that there was a letting business, leases had been in place previously re all the units and the properties were being actively marketed to let.