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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13868
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I purchased a commercial property in my own personal name

Customer Question

Hi, I purchased a commercial property in my own personal name around 4 years ago with the intention of renovating the property and selling it on as quick as I could.
The property had an option to tax on it so was subject to VAT.
I registered myself to be VAT registered, and once the initial purchase of the property was complete, I claimed back the VAT on the building.
Since then circumstances have changed and I am not looking to sell the property at this stage, but I am still VAT registered.
Each quarter I simply submit nil VAT returns.
I would ideally want to deregister myself from VAT now but I wonder where this would leave me with regards ***** ***** property that has the option to tax on it. I heard that if I deregister I must pay back all of the VAT I claimed on the purchase of the property which would not be possible for me at this stage.
Can you please let me know my options?
Many Thanks,
Mike
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Thanks for your post and the information - can you advise what your question is?Thanks Sam
Expert:  Sam replied 1 year ago.
Hi I do apologise - Only half of your question had come through - now I can see it all! You cannot deregister without having to pay the VAT back - or will have to wait until the natural cessation due to sale or after 20 years you can deregister. However I am surprised that HMRC VAT allowed you to register where there clearly is no trade use - or trade income arising - so what did you advsie when you registered for VAT Let me know if I can assist further Thanks Sam
Customer: replied 1 year ago.
Hi Sam,thank you for your reply.When I registered for VAT I advised HMRC that I would be buying and selling commercial property which I was.
However, now that I have bought this property and am not selling it at the moment, it just seems unnecessary for me to submit nil returns for the next 16 years or so.I now operate a Ltd business from the property that I am a director of, although the property is in my own personal name.
Would I need to pay any VAT or charge VAT to the ltd company even though I don't rent the property off myself if you know what I mean?Thanks.
Customer: replied 1 year ago.
Also, what is a natural cessation? Thanks.
Expert:  Sam replied 1 year ago.
HI Thanks for your response I agree it seems unnecessary - but as you carried on the opr to tax and chose to register for VAT - I am afraid this is the way it has to be - And yes you should be charging rent to the limited company and charging VAT on that rent as you are the limited company are separate legal entities and as you claimed the VAT suffered on purchase based on the fact you would sell, and have failed to do so - then you should inform HMRC that the sale will not proceed, and that the property will be used by the limited company so you are providing a taxable supply. So you should notify HMRC VAT as a matter of urgency as your trade use has changed ThanksSam
Expert:  Sam replied 1 year ago.
Hi Natural cessation - sale of the property ThanksSam
Customer: replied 1 year ago.
Okay great, and what if I run a business myself in my own personal name from the premisis instead of operating a ltd company from there, would I still need to charge VAT on services from that address then?Also, if I own other properties half/half with a business partner and I am VAT registered but he isn't, what is the situation with VAT on rent?
Thanks you.Mike
Expert:  Sam replied 1 year ago.
Hi Mike Thanks for your responseNo because then it would be owned within the trade itself and you would be the same legal entity that owns and uses the property for trade purposes - VAT is only charged where rents should be collected - in the cae of another business entity (whether yours or someone elses) as you chose to remin opt to tax and claim VAT back on the purchase on this basis. I can answer your new questions regarding the other properties and VAT but you will either need to list this as a new question OR I Can send you an additional services request - let me know how you wish to proceed - thanks But it would be appreciated if you could rate me for the level of service I have provided on this question (or click accept) you can still ask follow up questions of you have any - Thanks Sam
Customer: replied 1 year ago.
Hi, I will happily rate you that was my final question as part of my initial question. On the building that has option to tax on it, I have a business partner who is not vat registered. If I have to charge VAT on rents, then what is the situation with his half of the rent?
Expert:  Sam replied 1 year ago.
Hi He should be VAT registered as he would have needed to claim back his half share of VAT suffered on the purchase??? If he came in after then you should have charged him VAT on his share you transferred/sold to him So the upshot is he should have been VAT registered as the property has always been opted into tax Thanks Sam
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Customer: replied 1 year ago.
Okay I understand, thank you very much for your time Sam.
I will rate you now, and hopefully I can ask you one more follow up question?
Customer: replied 1 year ago.
Sam I wonder if I have one other property with a different business partner and the property is purchased in both our own names, and as you know my personal name is ***** ***** VAT, then would we need to charge vat on this residential flats rent or would it be me who has to pay some vat on my half?Thanks again,
Mike
Expert:  Sam replied 1 year ago.
Hi Thats the new question you will need to list or I can send an additional services request Thanks Sam
Customer: replied 1 year ago.
will that be an extra cost at all?
Expert:  Sam replied 1 year ago.
Hi I am afraid so - but if you list it you can then you can set the price you feel the question is worth - if I send you an additional services request then it may be mire than you wished to pay (although the price is still set at what is deemed to be reasonable) Let me know how you wish to proceed Thanks Sam
Customer: replied 1 year ago.
great can you please send an additional services request.
Expert:  Sam replied 1 year ago.
Hi I have sent an additional services request as asked for by you - can you accept or advsie further Thanks Sam
Customer: replied 1 year ago.
I should be okay for now many thanks.
Expert:  Sam replied 1 year ago.
HI You are welcome ThanksSam

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