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Conversion to residential

Conversion of a first floor to flats. Currently a restaurant with storage above.

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My client wants to convert a first floor in his rented commercial building to residential flats for rent. The building has an option to tax and VAT has been paid for some years by the tenant on the whole building. He no longer needs the first floor and so the owner wants to convert it. Can he recover any VAT on the conversion?

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By The Dullard
27th Feb 2020 11:10

No. But then that's not the right question.

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chips_at_mattersey
By Les Howard
27th Feb 2020 12:26

The right question is what rate of VAT is payable on conversion?
The answer, subject to meeting conditions, is 5%.

And then you have to think about partial exemption.

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Replying to leshoward:
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By The Dullard
27th Feb 2020 12:31

Or granting a long lease to someone you know...

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RLI
By lionofludesch
27th Feb 2020 12:52

https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#se...

Scroll down to section 7 et seq.

Sounds like your client is entitled to reduced rating. My experience is that the problem is usually getting the builder to understand that.

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