I have a client who has 4 holiday let homes held in a partnership with her husband. 2 of the properties have been let for 2 years following refurbishment of them. The other 2 properties were acquired in the past year and are currently being refurbished. The client has registered the partnership (encompassing all 4 properties) for VAT from April as this is when the VAT threshold was breached. I am now preparing the first return which is for April to September. I have some questions I am hoping you wonderful people may be able to offer some guidance on.
1. The Initial VAT return can encompass capital items purchased 4 years pre VAT reg which are still in use - can this include some of the refurbishment costs ie things like building materials that are ‘still in use’ at the time of the registration? I understand the services element ie labour won’t be allowable as it’s only for goods
2. 2 of the properties are currently under redevelopment. These will be let out as FHL as soon as completed. Can the input VAT on all of the costs incurred on development be reclaimed? The costs are not expected to exceed 250k therefore capital goods scheme shouldn’t apply.
3. Does any of the above have any bearing on the tax treatment when the client comes to sell the properties?
Thank you in advance for your help