VAT reclaim on professional fees

Can a Company formed by a church for refurbishment reclaim VAT on professional fees?

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I am the Treasurer of a Methodist Church that is planning a stuctural refurbishment of its buildings.  Some years ago, at the very beginning of the project, we created a Project Company (Limited Company) to handle this.  I was also told that we were able to reclaim VAT on professional fees (architects, consultants etc) through the company.  Was I advised corrrectly and does this still apply today?  

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Stepurhan
By stepurhan
12th Apr 2019 14:01

Any reason you cannot go back to the person that advised you of this in the first place?

That aside, you would need to supply a great deal more information to get a reliable answer. The reason why the refurbishment of the church's buildings is being undertaken through an entity other than the church would be a good start.

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By spidersong
12th Apr 2019 14:04

As with many things VAT related the answer is...it depends.

VAT recovery depends on whether VAT incurred on those fees relates to a taxable supply the company will be making. If it does then the likelihood is that the VAT is recoverable.

Of course if the company is planning on making a taxable supply then they'll likely be charging VAT to the Methodist church and so there was no VAT advantage to setting the company up.

Of course if the Methodist Church can recover the VAT because it's using those buildings for business then everyone's happy. But if they could do that then still no VAT advantage in setting up a company.

From HMRC's viewpoint the basic tenet of VAT is we only pay you VAT back if you pay us more VAT.

There is a possibility some work to the buildings may be zero rated in which case there may be some recoverable VAT for the company without charging any on: if the Church is a registered charity and the works themselves qualify, but basically that's looking at all the buildings, their uses, the works to be undertaken, the business plans of the church and of the development company. I think it unlikely you'll get anything reliable on an internet forum with such scope and if it's a significant capital project you'd be best getting someone in with suitable VAT knowledge of the building and charity sectors.

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