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Readers' forum: Property refurbishment

22 January 2019
Issue: 4680 / Categories: Forum & Feedback

Seeking a VAT-efficient way to pay for property works.

We act on behalf of a successful family company TradeCo which is VAT registered. Its premises are owned by a separate company (PropertyCo) which in turn is owned by two of the six shareholders of TradeCo.

PropertyCo is not registered for VAT and owns only the business premises of TradeCo – which is not opted to tax.

A proposed refurbishment is likely to cost about £200 000 excluding VAT. The work will comprise improvements capital expenses and repairs. It has been suggested that TradeCo should undertake the refurbishment work and then invoice on the structural work to PropertyCo which would have to absorb the VAT but would benefit from the capital cost in due course.

An alternative solution has been...

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