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A question recently came up about the VAT on an industrial unit where the owner had lodged an ‘option to tax’ on the building and charged his tenant VAT on the rent. That tenant moved out and the property owner had trouble getting a new tenant in the old-fashioned building, so he decided to demolish the building and rebuild something more modern that he could rent out for a higher price. He thought he wouldn’t have to charge VAT on rent any more, as he hadn’t lodged an option to tax on the new property. He was wrong.
Since 2008, it hasn’t been possible to opt land and buildings separately, so the option to tax made on the unit in 2010 covers:
So the property owner’s option to tax still applies to his newly built property – and he can input tax recovery on the redevelopment.
If the option to tax had been made on the land, rather than on a building, he could have excluded the new building as it was constructed on the opted land from the option to tax. This is only the case if the new building is not within the curtilage of any existing building.
If this sounds confusing, your best bet is to chat to us about your specific circumstances and we can offer you sound advice to ensure your VAT is handled correctly. Speak to our knowledgeable VAT team on 020 8530 0720 or email your query to firstname.lastname@example.org.
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In November 2002, having sold our other business interests off earlier in the year, I decided to set up Nordens Chartered Accountants. The easy part was knowing how to do it, as I had established and built a smaller practice a few years earlier, the difficult part was not following the traditional accountancy path. Having run businesses, both successfully and unsuccessfully, I wanted to help business owners resolve their short term problems and work with them to achieve their longer term goals. Business has always been my interest and I love that I can help business owners achieve what seems like the impossible every single working day.
Our limited company accountants have a range of qualifications from The Institute Of Chartered Accountants (ICAEW) to the Association of Chartered Certified Accountants (ACCA). They follow the bye-laws, regulations and ethical guidelines of the ACCA and we are an ACCA accredited employer. We are also accredited by Professional Passport for our Umbrella and accountancy services.
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