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Client has one commercial property that has 1 flat upstairs

Resolved Question:

HI,
Client has one commercial property that has 1 flat upstairs that he rents out.
he wishes to renovate the commercial property and build 5 more flats.
he is self building this.
the builders are all not vat registered.
Is there anyway of him claiming his vat on the materials.
I think not, but what if he treats the 5 new flats as new builds.
How about then?
thanks
Submitted: 5 months ago.
Category: Tax
Expert:  bigduckontax replied 5 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

You are correct, here is the guidance from the Gov UK website:

'For work to be zero-rated for VAT, it must qualify as a genuinely new, self-contained house or flat. This means:

  • it’s self-contained - there aren’t any internal doors or connections to other houses or flats
  • it can be used independently of any other property, including businesses
  • it can be sold on its own
  • it has proper planning permission
  • any existing buildings on the site have been demolished completely to ground level (unless you’re extending an existing building to create a new house or flat);'

As this is a conversion then the zero rating is inapplicable.

I do hope that you have found my reply of assistance.

Customer: replied 5 months ago.

anyways around this dilemma. client is adamant that his next door neighbour is claiming back all the vat on a similar build.

Expert:  bigduckontax replied 5 months ago.

Well, he cannot, it is as simple as that unless the last condition applies.

Customer: replied 5 months ago.

can it not be argued that he is

extending an existing building to create a new house or flat);'

in effect 5 new flats

Expert:  bigduckontax replied 5 months ago.

No, because it is not 'a genuinely new, self-contained house or flat' as provided for in the conditions unless the existing building is demolished to ground level.

bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3374
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 5 months ago.

Thank you for your support.

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