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Readers' Forum
Replies to Queries — 4
Property input VAT
Mr X is a professional providing services subject to VAT to mainly United Kingdom clients and is presently registered for VAT. He wishes to acquire premises with a 125-year leasehold to be used as his offices. The premium being paid is subject to VAT. Shares in the freehold will be transferred to the leaseholder soon after completion of the purchase.
Readers' Forum
Replies to Queries — 4
Property input VAT
Mr X is a professional providing services subject to VAT to mainly United Kingdom clients and is presently registered for VAT. He wishes to acquire premises with a 125-year leasehold to be used as his offices. The premium being paid is subject to VAT. Shares in the freehold will be transferred to the leaseholder soon after completion of the purchase.
Can he buy this leasehold property through a newly set up pension fund (SIPP) and should this be as a limited company? Can this company register for VAT and claim the full amount of VAT back as input tax? The company will charge Mr X a market rent.
Would Customs look at the input claim closely, as the pension fund is letting the property out to Mr X rather than to third parties, and under what circumstances can the input tax claim be disallowed?
If Mr X decides to sub-let part of the offices (less than 20 per cent by area), are there any VAT consequences?
Readers' views on these points are welcomed.
(Query T16,475)
