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VAT reclaim option on option to tax comm. property

Ltd Co Dental practice buying comm. property with opt-to-tax through a related VAT registered UK Co

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Should  the new landlord make its own option to tax election?

A  VAT registered Investment Ltd Co (Entity A) is buying from the market, commercial property with an option to tax election, and letting the property to a related company (Entity B) dental practice for its dental services. Both entities have common shareholder for both shareholding and control. There is a significant amount of refurbushment and redesign work to be done by the investment company landlord. VAT is agreed chargeable between new landlord co  and dental practice tenant. 

Question - A)  Is the above arrangement sufficient for the new landlord to reclaim its input VAT on the property purchased and other supplies while making its quarterly VAT returns OR Must it apply for a separate option to tax through a VAT16114A? 

 

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21st May 2019 19:25

The arrangement is likely to trigger anti-avoidance legislation, resulting in the investment company being unable to recover input tax on the refurb.

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