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Readers’ forum: Matter of timing?

18 July 2017
Issue: 4608 / Categories: Forum & Feedback , VAT

Timing of building costs of extension when claiming input tax.

I act for a husband-and-wife partnership who run a grocery shop. They own the freehold of the building which also includes a first-floor flat where they live as their main residence.

The shop is registered for VAT. The couple are planning to build a two-storey extension at the back of the premises. I suggested that they claim 50% of the VAT charged by the builder on his invoices. Is this reasonable?

One factor that might be relevant is that my clients plan to move out of the flat at the end of the year to move to a house with more space and then the flat will be rented out on a buy-to-let basis. I understand this might create an opportunity for 100% of the input tax to be claimed on the extension cost. So is it worth my client delaying the project until later in the year?...

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