Should I register my company for VAT? - Developer

[alecl]

Hi,

I am the director of a company which has recently purchased a mixed use vacant property (3 bed flat and ground floor retail unit) at auction. The flat was let up until recently and the retail unit has been vacant since 2016.

Our plan is to submit a new planning application to demolish the existing building and to build new flats on the site. My understanding is as follows, and I would be extremely grateful for any comments/ clarification or agreement of this:

1. If I were to register my company for VAT and demolish the existing buildings and develop the flats:

(a) I would be able to claim back any VAT charged on the build cost and materials, so long as the existing property was demolished upon completion of the works as this is classed as zero rated;

(b) I would be able to claim back VAT incurred on solicitor fees at both the buying and selling stages, planning and architect fees, and agent fees;

This is so long as I don't let the flats out inbetween works completing and sale.

2. If I choose not to elect for VAT:

(a) I would pay VAT on solicitor fees, agent fees at sale, Planning and Architect fees at 20%

(b) I would not pay VAT on build cost/ materials if devloping the flats as a new build.

From looking at my scenario, would you consider it worthwhile my registering the company for VAT considering that VAT could possibly be reclaimed on Planning/ architect and sale fees?

Thank you for your help.

[les35]

1. Appoint a VAT specialist to guide you.
2. register for VAT. If you sell any units, you make zero rated sales, so you can recover input tax.

3. Do not 'Opt to Tax.' These are domestic buildings, to this is not required.