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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3822
Experience:  FCCA FCMA CGMA ACIS
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I am acquiring a VAT registered unit through my Company. Currently

Customer Question

i am acquiring a VAT registered unit through my Company. Currently this Companies only income is from Rent Received from another unit which is not VAT registered.
I want to be able to reclaim the VAT l am being charged by the seller. What do l have to do in order for this to happen. It is my intention to lease the unit to a VAT registered business.
Thank you.
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. There is no problem here. Your company, registered for VAT, is buying an item upon which VAT is being charged. You merely put the VAT through your books of account in the normal way putting the tax as an input and reclaiming it in the usual quarterly return. I do hope that my reply has been of assistance.
Customer: replied 1 year ago.
My company is not currently registered for VAT, and l do not charge VAT on the rent l am already receiving on the unit l currently own.
Expert:  bigduckontax replied 1 year ago.
That is quite all right, rentals being exempt from VAT. You can elect to charge VAT on rentals, but when you come to sell you must charge it on the selling price also. This may make a sale un-competitive as a prospective buyer not registered for VAT may jib at paying an additional 20%.
Customer: replied 1 year ago.
So, are you saying that all l have to do is voluntarily register my company now (Current Rental Income is £28,000 per annum). Do you think l would encounter any problems with regards ***** ***** now, having not registered previously, and when l claim back the VAT on the new unit?
Expert:  bigduckontax replied 1 year ago.
Yes, you do need to register and you should encounter no problems if you explain that there is a lot of input tax to reclaim. You can reclaim the input tax on the quarterly return for the period in which the purchase was made and, it it is pre registration then this would be on the first return.
Customer: replied 1 year ago.
It seems to be the best way forward, and l am really thankful for your advice on this. Therefore, lastly do you think there is anything you can think of that l should be wary of?
Expert:  bigduckontax replied 1 year ago.
But you will have to account for VAT and submit VAT returns. You can always de-register after two years anyway. There is always the possibility that HMRC will refuse the registration. In that case there's no skin off your nose, save that you will be paying 20% over the odds for the company.
Our club room needed a new roof, ran into tens of thousands of pounds. We registered for VAT and reclaimed the input tax. True we had to account for VAT on subscriptions and canteen sales, but this was small beer as opposed to the thousands on pounds of VAT the roof repair necessitated.
Customer: replied 1 year ago.
What could be the reasons why the Revenue could refuse the registration?
Expert:  bigduckontax replied 1 year ago.
That your turnover is below 82K in a year. As you have a big input tax reclaim I consider that possibility unlikely although it would be an automatic reaction by HMRC!
Customer: replied 1 year ago.
Sorry to come back again, what would your suggestion be if they flatly refused the registration. Do l have any other routes available to me?
Expert:  bigduckontax replied 1 year ago.
Unfortunately, no.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thanks very much for your time and your help. Cheers.
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.

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