Readers' forum : Registration puzzle

19 September 2017

Issue: 4616 / Categories: Forum & Feedback

Input tax on property costs before an option-to-tax election.

I have a client who has created a problem for himself with VAT (he is not VAT-registered). Five months ago he bought a commercial property (no VAT charged) and has spent £120 000 plus VAT on the renovation works including professional fees.

He did not tell me about the property purchase until this week because the works have now been completed and he is looking for a tenant. His view is that he now needs to opt to tax the property register for VAT and charge it on the future rent.

The client believes that he can claim input tax on all of the building works and professional fees on his first VAT return because they were incurred within the past six months. He says this forms the pre-registration period when input tax can be claimed on the cost of the services received.

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