Changes to a building after the VAT option to tax

Source: HM Revenue & Customs | | 09/01/2019

There are special VAT rules that allow businesses to standard rate the supply of most non-residential and commercial land and buildings (known as the option to tax). This means that subsequent supplies by the person making the option to tax will be subject to VAT at the standard rate.

The ability to convert the treatment of VAT exempt land and buildings to taxable can have many benefits. The main benefit, is that the person making the option to tax will be able to recover VAT on costs (subject to the usual rules) associated with the property including the purchase and refurbishment of the property.

If you make changes to a building (such as an extension) after you have opted to tax then the option to tax will usually apply to the whole of the extended building. However, care needs to be taken for linked buildings and forming a complex where the option to tax will not always apply depending on the exact circumstances.

It is also possible to exclude a new building from the effect of an option to tax where the building is constructed on land that has been the subject of an option to tax. Care should be taken before making a final decision as this can affect entitlement to input tax recovery on associated costs. It is important to remember that once an option to tax has been made, it can only be revoked under certain limited circumstances.



Contact Us

13 West Street
Exeter
Devon
EX1 1BB
Tel: 01392 823999

Also in Seaton:

8-10 Queen Street
Seaton
Devon
EX12 2NY
Chris Hammett
Tel: 01297 624188  

 

Cookie Policy

Latest News

Don’t overclaim for equipment purchases
16/01/2019 - More...
You can use the Annual Investment Allowance (AIA) to claim a very generous 100% first year tax relief for qualifying

Reducing payments on account
16/01/2019 - More...
Taxpayers are usually required to pay their Income Tax liabilities in three instalments each year. The first two

Could you claim the Marriage Allowance?
16/01/2019 - More...
If you or your partner are a low earner or not working, then you may be eligible for the marriage allowance. The

Newsfeed Search


Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login