Re-phrased Question: VAT on Property

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT member discussion
If a client purchases a freehold property which is converted into 5 flats, is this a vatable purchase at 17.5% or zero rated because it is residential. Basically, is it commercial or residential?

Everyone is avoiding this question, but someone must know the answer...please.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Re-phrased Question: VAT on Property

    I would phone the VAT office and get a call reference for the answer.

    Everyone hates VAT and property - it is ugh! I have had to resort to writing to get a VAT ruling on something - I even asked a nice (yes nice) VAT inspector during a routine inspection on a client for the answer, and even he didn't know....

    There you are, you have got an answer now - sorry though that it is not the definitive reply you wanted :lol:

    Claudia
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Re-phrased Question: VAT on Property

    I avoided your initial question the first time because you seem to be asking the wrong question. It is a complex area as Claudia says and you haven't given enough detail now.

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Re-phrased Question: VAT on Property

    What else can I tell you. Basically the property is being sold freehold and is operated as a business renting out the 5 residential flats. I just wondered if anyone new whether this building should be sold as a commercial building and therefore VAT be charged, or whether it was residential and therefore zero rated. Maybe I will have to contact HMRC for an opinion on this one.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Re-phrased Question: VAT on Property

    Residential property is residential property, regardless of whether the owner is in the 'business' of letting.

    Commercial property is anything other than dwellings.

    There will be no VAT unless there is an existing option to tax on the property, which is unlikely; unless perhaps it was a commercial to residential conversion.

    From the wording of your question it appears that you act for the purchaser. In which case, the vendor should already have informed your client whether there is VAT payable on the property.

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