Readers’ forum: VAT exemption

One of my clients has a partial exemption dilemma with VAT. He trades as a VAT-registered electrical contractor but has recently bought a three-bedroom house which is in a state of disrepair with the plan to renovate it and sell. The eventual sale of the property will be exempt from VAT but it will not be sold until summer 2023.

I expect that my client will be able to claim input tax on the building materials bought for the house because of the partial exemption de minimis limits (he will do all of the work himself). But how should we apportion input tax on business overheads when we check the de minimis calculations for example VAT on accountancy fees and telephone costs? The business will have no exempt income in his partial exemption tax years ending March 2021 2022 and 2023 so...