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bigduckontax
bigduckontax, Accountant
Category: Tax
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Client has one commercial property that has 1 flat upstairs

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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

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 1 year ago.

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

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

Customer: replied 1 year 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

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 and other Tax Specialists are ready to help you

Thank you for your support.