VAT on new commercial property

[Nat2321302]

I would like to know how the VAT claim back on commercial property works purchasing under Limited company.

I have a client who is setting up a Limited company registering it for VAT and purchasing this commercial property and continue the existing rental business. The problem is he does now have enough money to pay the VAT of around 100K so he was thinking to claim back the input VAT of 100K on his first VAT return and pay the seller once he gets the money. The contract gives him 3 month to pay back the VAT.

My question is, is this the best way or is there any other ways

Thanks

[Nat2321302]

Apology, its not a new Commercial property - its a preowned

[roninellis]

If your client is purchasing a pre-owned commercial property under a newly registered Limited company, claiming back the VAT can be a bit tricky. The key thing to remember is that HMRC allows input VAT to be reclaimed only on VAT-registered businesses for taxable supplies. So, your client would indeed reclaim the VAT on the first VAT return, but timing and cash flow are critical, HMRC usually processes returns within 30 days, but delays can happen.

Some investors in similar situations use a staggered approach: negotiating with the seller to pay the VAT after reclaiming it or factoring it into bridging finance. For instance, some landlords use platforms like Property Store(https://property-store.co.uk/) to model cash flow scenarios and ensure they won’t be caught short while waiting for VAT repayment. This helps avoid surprises if the claim takes longer than expected.

It’s also worth double-checking the contract: if it allows three months to pay the VAT, that window could be enough, but having a buffer is safer. Consulting an accountant specialising in commercial property VAT is usually the best step before committing.