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VAT for a property company

VAT for a property company

Hi I want to register for VAT for my property company....But since the properties are mainly for residential although my turnover will exceed the threashold, HMRC refused application.

I have even mentioned that I may have commercial tenants they still refused. 

Are they right to refuse my application..

your time is very much appreciated.



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04th Feb 2013 14:18


If HMRC are not satisfied that you will be making taxable supplies it is within their power to refuse application (refusal is appealable).

Note that turnover does not include exempt supplies.

The question is - why do you want to register?

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04th Feb 2013 14:21

Why do you want to register?

Even if you had commercial premises which were taxable, you can't recover any input VAT that's directly attributable to the making of exempt supplies.   So you won't be able to recover all the input VAT on agents' fees and repairs relating to your residential properties in any event.

If you're only making exempt supplies and can't provide evidence of an intention to make taxable supplies, then yes; HMRC can't do anything other than refuse your application, because you're not eligible to be VAT registered under the legislation.

EDIT: I started typing before BKD's response was there.

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By DMGbus
05th Feb 2013 09:00

Upto £7,500 exempt VAT recoverable...

The precise figures will determine how much exempt input tax (if any)could be recoverable under the computations required under partial exemption.

At most the exempt VAT recoverable would be £7,500 a year.

So, ascertain what turnover is (or potentially is **) taxable, how much must remain exempt***, the input tax that relates to taxable turnover the input tax that rel;ates to exempt turnover and then the residual input tax.   Do the maths to see how much input tax would be recoverable.

** "potentially" means, for example, commercial letting where no option to tax has yet been applied - it becomes taxable turnover by applying for the option to tax.

**** Some turnover must remain exempt - for example residential letting, buying and selling most used (unopted) properties.

The above requires knowledge of several VAT topics:

# Partial exemption (including understanding how upto £7,500 pa. of exempt input tax might be recoverable)

# Option to tax

and, in some circumstances

# Capital Goods Scheme

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05th Feb 2013 12:34

Thank you for all your comments and time


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