A client recently bought a residential property for himself. For some reason, the property was on two title deeds. The main house on one and a small portion of the garden on the other. My client agreed with the seller to buy the house and then the second portion at a later date when he had the money.
When the agreed date approached to buy the second portion arrived, my client didn't have the money and therefore bought the property through a limited company he is a shareholder in, that had cash. The Ltd co is the registered owner of the property.
The client now has planning permission to put a kitchen extension and garage on this portion of land. It will be joined to the main house.
He wants to know can he reclaim the VAT on the development and then sell the property to himself at the market value at date of transfer. Any VAT advantage of doing this way should, in theory, be nullified by CGT payable by the company on the transfer.
If he did the development in his personal capacity would the extension qualify for a VAT rebate?
Possibly I should refer him to an expert in this area. Any recommendations?