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Where Taxpayers and Advisers Meet

Vat on property development

LW
Posts: 13
Joined: Wed Aug 06, 2008 3:16 pm

Vat on property development

Postby LW » Thu Dec 27, 2018 7:40 pm

Hi

My company, A Ltd just completed a student accommodation development and have claimed all the VAT (5%) during this process. I am going to lease this to another company I own, B Ltd , at say £10,000 (no VAT) per month for over 21 years. The £10,000 per month includes all bills (gas,electric,water, broadband etc).

Can Skyline claim all the vat from the bills (gas,electric,water, broadband etc) .
Does Skyline have to pay any VAT on the rent received from Studenthomes4u.


I also have a commercial unit on ground floor which is currently empty.

Any advise will be appreciated.
Thanks

les35
Posts: 547
Joined: Wed Aug 06, 2008 3:09 pm

Re: Vat on property development

Postby les35 » Fri Dec 28, 2018 10:55 am

If A's supplies are exempt, it cannot claim the VAT at 5%. (If you have converted a commercial building, is the resulting structure 'dwellings' or 'RRP'? - the scheme may not be eligible for 5%.)
A (Skyline?) cannot claim VAT on gas and electricity since the supply is an exempt lease.
What will you do with the commercial property?
It sounds like you need professional advice to

LW
Posts: 13
Joined: Wed Aug 06, 2008 3:16 pm

Re: Vat on property development

Postby LW » Wed Jan 02, 2019 4:19 pm

HI Les

Yes, the building was a commercial building which was converted.
The supply is zero rated since lease over 21 years.

LW
Posts: 13
Joined: Wed Aug 06, 2008 3:16 pm

Re: Vat on property development

Postby LW » Thu Jan 03, 2019 9:34 am

Hi

I think I am trying to say, is it possible to reclaim input vat (vat on bills etc) on zero rated supplies (ie long lease over 21 years).

les35
Posts: 547
Joined: Wed Aug 06, 2008 3:09 pm

Re: Vat on property development

Postby les35 » Thu Jan 03, 2019 5:42 pm

If the supplies are zero rated, then register for VAT, and reclaim input tax. You can back-date such registration up to four years.

LW
Posts: 13
Joined: Wed Aug 06, 2008 3:16 pm

Re: Vat on property development

Postby LW » Sat Jan 05, 2019 11:14 am

Hi Les
The company is already Vat registered and has been claiming the vat back during the construction phase. It is now leasing the building (>21 year lease) so has a zero rated supply. The lease includes all bills etc. So I claim vat on input but am not paying back any VAT on the supply (since zero rated), hence have a payment claim from VAT man every month. Surely the VAT man will not be happy with that because they are always paying out rather than receiving anything.

les35
Posts: 547
Joined: Wed Aug 06, 2008 3:09 pm

Re: Vat on property development

Postby les35 » Mon Jan 07, 2019 5:05 pm

There is no problem!
Where the lease is properly zero rated, you can claim all input tax incurred, subject to the usual rules.
Don't lose sleep over this one.

LW
Posts: 13
Joined: Wed Aug 06, 2008 3:16 pm

Re: Vat on property development

Postby LW » Mon Jan 07, 2019 6:29 pm

THANKS LES


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