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09 November 2021
VAT on land dilemma following fire.
One of my clients owned a commercial building which he rented out to a local business that traded as a sauna and health spa. He opted to tax the building in 2007 and has always charged VAT on the rent to the tenant.
Following a fire last year the building was totally ruined and the site is now just bare land. Having now received his insurance pay-out my client is considering one of two options:
- sell the land to a local speculator who can then choose to use it as they wish; or
- obtain planning permission to build a ground floor shop with two floors of flats above the shop – he intends to sell the flats on a 250-year lease and rent out the shop to generate income.
Is the option to tax election from 2007 now irrelevant following the demise of the previous...
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