Hi all,
Just need clarification on the situation regarding the recovery of input VAT when purchasing a commercial property where the intention of the purchase is residential development of the site. Where the commercial porperty in question has been opted for VAT am I right in thinking that the purchasor would need to also opt to tax to enable recovery of the VAT on the purchase price?
Many thanks!
Replies (7)
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The purchaser would not also need to opt to tax if they will use it in making a taxable supply. The supply of new build homes is zero rated - not sure though whether you're talking about a demolition and rebuild, or a conversion of an existing building.
Numbers involved are likely to be significant - best to seek professional assistance.
It's a purchase and whether VAT will be recoverable will depend on whether the ultimate sales will be taxable or exempt. You definitely don't need to opt to tax.
But you don't give enough information for sensible comment.
It's a complex area. Make sure you get it right as there'll be thousands involved.
A few years ago, I had the unpleasant task of breaking the news to a client that he'd have to repay all the VAT he'd reclaimed on the advice of a much bigger firm than me, news only partially tempered by getting VAT on his contractor bills reduced from 20% to 5%.
If you're razing it to the ground, literally, you should be grand.
Photos are nice to keep. I'm not saying they made the difference between claiming and not claiming for one of my clients but they certainly shortened the verification process to a half hour chat with the VATlady.
Good idea
Best if he is an accountant with specialism, not an ex HMRC Vat specialist.
Ex HMRC tend to think HMRC opinion is a correct opinion of the law.