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Where Taxpayers and Advisers Meet

VAT Group registration

Mr Dell
Posts:24
Joined:Wed Aug 06, 2008 3:43 pm
VAT Group registration

Postby Mr Dell » Mon Apr 24, 2017 10:55 pm

Would be grateful for assistance.

A small IT company has a subsidiary which owns and lets a couple of residential properties. At the moment the IT company is registered for VAT and its subsidiary is not. If I went for a group registration with the IT company and the property company, given that the turnover will be mainly from the IT company and the VAT recovery will be less than £625 on average per month from the residential company, would the group be able to recover the VAT on expenditure in the residential properties. I read somewhere it would be able to but just need confirmation as it is quite nifty tax planning point.

Thanks in advance.

Pete

les35
Posts:635
Joined:Wed Aug 06, 2008 3:09 pm

Re: VAT Group registration

Postby les35 » Tue Apr 25, 2017 8:59 am

Yes and no!
HMRC Notice 706 explains the Partial Exemption rules, and the £625 per month 'de minimis' limit. This is what you are referring to. This does provide a 'nifty tax planning point.' However, overhead input tax (legal fees, stationery, telephone bills, etc) also needs to be brought into the equation.

Mr Dell
Posts:24
Joined:Wed Aug 06, 2008 3:43 pm

Re: VAT Group registration

Postby Mr Dell » Tue Apr 25, 2017 11:38 am

Hi Les,
Thanks for the reply, I understand the partial exemption rules and thanks for the reminder on the overhead (but its an IT contractor) so there is not much.
I just wanted to clarify to do this for a VAT group because then the client will be able to get the VAT back on purchases in the residential properties (which seems absurd) but it is what is and I am grateful for the clarification.

Pete


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