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One of my clients made a big mistake in 2017 costing him £30 000 of VAT. Basically the client purchased a commercial property in 2015 and claimed input tax on the purchase price because he registered for VAT and opted to tax the building.
He charged VAT on the rental income for two years until 2017 but then a new tenant took over the building a small business that was not VAT registered.
My client had a brainwave and decided to deregister from VAT because the annual rental income was less than £83 000 therefore saving a VAT bill for the tenant who could not claim input tax. However HMRC picked up on the fact that he did not account for output tax on his final VAT return on the market value of the property he still owned. The department assessed...
