vat on renovations

by **timone** on Tue Dec 06, 2011 11:47 am

Hi, I was hoping somebody can help. I am thinking about renovating my garage and turning it into a office/showroom and was wondering if there are any benefits in doing this, i.e how will it effect my accounts bottom line etc and can i reclaim the vat and will there be tax benefits etc etc.
I am a limited company if that helps

many thanks in advance, as the sooner i get advice the sooner i can go ahead if it is vaible

Thank you

by **section 44** on Tue Dec 06, 2011 12:08 pm

Who owns the garage (you, you and another person(s), teh company or a third party etc) ?

Do you propose to seek any planning permission?

by **timone** on Tue Dec 06, 2011 3:34 pm

hank you for the reply. I own the garage, it is link attached to my property. I thought i did not need planning permission, but will have to check it out to make sure.
I was not sure on the accounts/tax/vat implications on the change and would rent it out to the company if that is required, that is what i am trying to establish, would it be viable and would i then be able to reclaim the vat etc etc.

Thank you

by **section 44** on Tue Dec 06, 2011 4:02 pm

To enable VAT recovery on the conversion work you would need to exercise an effective option to tax in respect of the property and then charge the company a market rent. A couple of potential issues here to consider:

1. Would such an option to tax be rendered ineffective under the development financier anti-avoidance provisions? Probably.

2. Would such an option tax (if effective) have a negative impact on your house's value? Probably not given that it would be ineffective in respect of a sale to a person who intends to use the house as a dwelling.

by **timone** on Tue Dec 06, 2011 4:35 pm

Thank You Section 44,
But i think i may be being a bit dense.
1) Can i reclaim the Vat
2) How?

Thanks again

by **section 44** on Tue Dec 06, 2011 5:45 pm

timone wrote:2) How?

section 44 wrote:To enable VAT recovery on the conversion work you would need to exercise an effective option to tax in respect of the property and then charge the company a market rent.