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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15980
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I inherited a property five years ago which was uninhabitable,

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I inherited a property five years ago which was uninhabitable, having now obtained the necessary planning permissions and finances for renovation do I qualify for the reduced rate of 5% VAT on a property empty for more than two years, or should the renovation work have commenced within a year of my acquiring the property?


There is a link to Section 8 of VAT Notice 708 here, though I know you have read it, for ease of reference.

As far as timing is concerned, the basic rule is that the building must not have been lived in during the two years before renovation work begins (paragraph 8.1). However, if the property is already occupied before the work starts, so long as the conditions in paragraph 8.3.4 are met (as well as all the other conditions), then reduced VAT rating can be applied.

Given that you have owned the property for five years, if you move in before the work commences, you won't qualify for reduced rate VAT under paragraph 8.3.4 as you won't meet condition 4. You are, therefore, relying on paragraph 8.1 in that you cannot be occupying it before the work begins and it must have been unoccupied for at least two years before the work begins.

I hope this helps but let me know if you have any further questions.

Customer: replied 2 years ago.

So I can definitely claim the reduced rate under 8.1 as there is definitely no way I will be occupying the property before work commences?

So long as you meet the other criteria set out in Section 8. It's not just about timing, though that is a big part of it.
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