I appreciate that VAT can be ridiculously complicated but I'm hoping that my client's scenario isn't one of those. Being more of a VAT numpty than a VAT expert, however, means that I'm really not sure where to begin in terms of advising him.
So, my client has a half share in a company which ran a boutique hotel which has failed. He provided the money and the other shareholder the hotel expertise. She has now withdrawn from day-to-day contact and essentially left my client holding the baby. That's the background and there are obviously lots of implications to that but let's leave those alone and not muddy the waters (unless there is somehow a VAT implication). Just in starting to frame this query, though, it occcurs to me that I don't even know for sure whether the company is VAT registered but I would assume that it must be.
Now to the "plan": my client has provisionally reached an agreement with a charity to convert a wing of the building into sheltered accommodation but, again, I don't know if that is a respite care situation or longer-term accommodation or whether there is a VAT implication there either.
My initial thoughts (but as the above self-professed numpty) is that none of this qualifies for special VAT treatments (unless sheltered accommodation qualifies as being a dwelling), so no VAT reclaim to make and the eventual supply to the chaity would be exempt too. My client, however, is firmly of the belief that the conversion will qualify for reduced rate VAT which he thinks he will be able to reclaim (I don't think he's thought as far as the onward grant of an interest yet).
So, is my client right and is there a possibility of reduced rate VAT which could be reclaimed? And if so, what does that mean for the onward lease to the charity: does that then fall into VAT?
I would be very grateful for any and all answers. I'm not expecting chapter and verse, just any sort of steer would be very much appreciated.