I have a client who has received a substantial grant from the local council to pay for the flooring in a refurbished building.
Client needed to change the floor to be suitable for his business. He took over an empty premises which the council had refurbished in part. He pays rent and rates as normal.
Question is should the grant be treated as a vatable supply? He's claimed VAT back on the cost of the flooring (agreed by HMRC). Income is in the following quarter.
I'd like to get it right as he's likely to get an inspection visit - 2 quarters since opening both with substantial reclaims.