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Option to tax but already VAT registered

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If a company is already registered for VAT for their trade and they want to buy a rental property (domestic) would they automatically have to charge VAT on the rent or would they still have to apply for the option to tax? If they did have to charge VAT an SPV will probably be in order.

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By Anonymous.
09th Jul 2020 11:12

A VAT registered business can make supplies that are exempt.

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By Wilson Philips
09th Jul 2020 11:24

By domestic I assume you mean residential in which case the rents will exempt even with an option to tax in place.

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Hallerud at Easter
09th Jul 2020 11:52

Just be careful the company does not do this without first discussing with their accountant, an existing trading company purchasing a property to let may cause harm to the owner of the shares in that company regarding future CGT and IHT re said shares.

As a general rule property acquisitions/disposals, given the frictional costs of changing things later (if even possible) should always be discussed with professional advisers before anything is done , certainly before either marketed or sourced.

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By Paul Crowley
09th Jul 2020 12:12

Why buy in the company? Does company have lots of spare cash and accumulated reserves?

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Replying to Paul Crowley:
By Thomas654654
09th Jul 2020 12:26

The company does have a lot of reserves and the director wishes to buy a much more expensive property personally, around £1.5 million, and does not want to be penalised by the additional stamp duty then (second property additional SDLT). The company can also claim the mortgage interest if it's partially mortgages it which he is not able to do in full by owning it as an individual.

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