Share this content
7

Recovering VAT on commercial property purchase

Didn't find your answer?

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)

Please login or register to join the discussion.

avatar
By the_drookit_dug
25th Aug 2020 17:08

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.

Thanks (0)
RLI
By lionofludesch
25th Aug 2020 17:41

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%.

Thanks (0)
avatar
By bettybobbymeggie
25th Aug 2020 17:48

Forgive the scant detail - bit of a habit for me on here.

Property is a pub with a residential top floor and pub ground floor. Buyer is VAT registered building contractor. The plan is to demolish and build residential new builds. I was convincing myself that the residential element of the existing building was somehow relevant in how much of the VAT on the purchase price could be reclaimed but I am overthinking.

Thanks (0)
RLI
By lionofludesch
25th Aug 2020 17:56

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.

Thanks (0)
avatar
By bettybobbymeggie
25th Aug 2020 19:39

Much appreciated, and good idea about the photographs. I am also speaking to a VAT consultant in the morning to make sure I haven't missed anything!

Thanks (0)
Replying to bettybobbymeggie:
avatar
By Paul Crowley
25th Aug 2020 20:09

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.

Thanks (0)
Replying to Paul Crowley:
avatar
By djbrown
26th Aug 2020 09:52

What? !!!!!

Thanks (0)
Share this content

Related posts