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Empty property owned by Ltd Co and 5% VAT

Can a Ltd Co take advantage of the 5% VAT from suppliers?

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A Limited Co client has a residential property which they have been renovating and it has been empty for over 2 years.

They aren't VAT registered.

Can they take advantage of the reduction in VAT from their suppliers (not materials from a builders merchants I understand) if they can prove it has been empty?

Havent come across this before.

Many thanks!

Replies (6)

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By Accountant A
15th Jun 2020 18:15


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paddle steamer
12th Jun 2020 15:36
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By Les Howard
12th Jun 2020 16:17

Two year rule.
Letter from Empty Property Officer to confirm property was vacant.
Notice 708, as quoted above.

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By Tamara habberley
15th Jun 2020 09:54

As per the other comments re checking PN for timeline for the two years and per Les re evidence that property empty. Please note however, unfortunately not all councils have an Empty Houses officer and some have a different title for them so it can take a bit of hunting around! HMRC should accept a bundle of evidence as an alternative but if this is the case probably worth seeking HMRC agreement in advance.

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By Echo761
15th Jun 2020 10:53

It is possible to reduced-rate renovation services when the following conditions are satisfied:

•the premises being renovated or altered are ‘qualifying residential premises’
•the services are ‘qualifying services’
•the premises have not been lived in for at least two years
•if appropriate, a valid certificate is held
•if appropriate, planning consent/building control approval has been obtained
VATA 1994, Sch 7A, Group 7; Notice 708, para 8.1.2

What are ‘qualifying residential premises’?
Qualifying residential premises include the following:

•a single household dwelling
•a multiple occupancy dwelling
•a building (or part of a building) that was used for a relevant residential purpose when last lived in, and will be used solely for that purpose once the work has been completed
•a building (or part of a building) that was one of a number of buildings that were together used for relevant residential purposes when last lived in, and will be used solely for that purpose once the work has been completed

I usually find the builders can be a bit uncomfortable in applying the reduced-rate as they know they are on the hook if HMRC visits and they have not charged 20% VAT. I provide the builder with a letter explaining why they can reduced rate the supply and they keep this on file in case of a visit from HMRC.

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