Share this content

VAT on holiday let

Is there anyway to reclaim VAT on initial repairs to holiday lets whilst not paying VAT on rent?

Didn't find your answer?

My query relates to a farmer client who recently acquired 3 holiday lets as part of a farm purchase. He has reclaimed VAT on alot of repair/improvement costs through the farm prior to letting the properties. He has now come to let out the properties and found that he must charge VAT. Is there anyway he can transfer the properties to another business (could be a limited company or in his wifes name - she looks after the holiday lets anyway) and not repay the VAT on the repairs. We initially thought about a long lease to the new entity (which would then holiday let the properties) so the letting would be zero rated but VAT notice 708 seems to exclude holiday lets from zero rating (although I'm not sure these properties fall within the definition here - there is no actual restriction on use or occupancy, they are just holiday let because they are surplus to requirements on the farm my client bought). The income from the 3 properties is below the VAT registration limit.

Thanks

Replies (10)

Please login or register to join the discussion.

avatar
By Accountant A
10th Sep 2018 17:59

Fraud?

You say "He has reclaimed VAT on alot of repair/improvement costs through the farm prior to letting the properties. He has now come to let out the properties and found that he must charge VAT. "

Who was advising him? In fact, who was preparing his VAT returns??

Thanks (0)
chips_at_mattersey
By Les Howard
10th Sep 2018 18:30

Why would the long term lets be zero rated? Did the farmer construct them?
The vendor may have recovered input tax on repairs under his partial exemption calculation, which was evidently mis-applied!

We charge more for prison visits!

Thanks (0)
RLI
By lionofludesch
11th Sep 2018 08:35

Cake and eat it spring to mind.

Thanks (0)
Replying to lionofludesch:
By Ruddles
11th Sep 2018 09:11

But what's the point in having cake if you can't eat it?

Thanks (0)
Replying to Ruddles:
Maytuna
By DJKL
11th Sep 2018 12:23

It's still useful for hiding the file that will be needed to get through the bars of the cell.

Thanks (0)
Replying to lionofludesch:
avatar
By andy.partridge
11th Sep 2018 10:29

100 hours community service at best. Take cake to share at care home.

Thanks (0)
avatar
By Liz098
11th Sep 2018 12:06

He does his own VAT return so presumably no one was advising him. As his business makes 100% zero rated sales there is no partial exemption calculation. As far as I can see he hasn't yet done anything wrong it just depends what he includes on his next VAT return.

With regard to why the long term lets would be zero rated I suppose we were relying on Group 5 of VAT Act 1994 in that the cottages hadn't been used for in excess of 10 years ......

Thanks (0)
Replying to Liz098:
By Ruddles
11th Sep 2018 12:26

Agreed - none of the previous responses are relevant to your particular question.

Thanks (0)
Replying to Liz098:
Maytuna
By DJKL
11th Sep 2018 12:31

Group 5?

Are these not existing dwellings that your client has merely tidied up (repaired), he surely has not built them or created them by conversion of a non residential building?

Thanks (0)
Portia profile image
By Portia Nina Levin
11th Sep 2018 12:56

WTAF?

Thanks (0)
Share this content