My client wants to de-register. He bought licenced premises and re-claimed around £94,000 input tax a year ago. The idea was to let the premises and charge VAT (Partial Exemption) on the rental. This was all approved by the VAT office. However, the rental income has never happened so all VAT returns since that date have been zero - inputs and outputs. When reading the legislation, well actually HMRC's guidance, I came accross this:-
"You’ll have to submit a final VAT Return for the period up to and including the cancellation date. You must account for any stock and other assets you have on this date if:
•you could reclaim VAT when you bought them
•the total VAT due on these assets is over £1,000"
They obviously still have the asset (the licenced premises) so does this indicate that the initial VAT reclaimed will have to be repaid?
I have never noticed this when de-registering a client before, but I have never had such large sums involved with stock and/or assets.
Thank you.
Replies (4)
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Not sure what you mean by ".... charge VAT (Partial Exemption) ...." Is that to reflect the domestic accommodation ?
But, yes, prima facie, it looks like it'll cost £94,000 or thereabouts to deregister.
What are the client's revised plans for the property ?
If you have opted to tax, the deemed Supply on deregistration May be substantial. Be careful.