I Need a VAT Expert

[E55BOF]

A lady of my acquaintance has asked me for help regarding VAT. She's looking to buy for cash a commercial premises, vacant at the moment, and open a restaurant. Her estate agent says the vendor says she has to pay VAT on the purchase. One person at the estate agent says that if she is registered for VAT, she can claim the VAT back; the other says the vendor is wrong, and she doesn't need to pay VAT. She's spent a couple of hours on the HMRC helpline, but was cut off every time before getting through.

The questions are, does she have to pay VAT on the purchase in the first place, and if she is VAT registered, can she definitely claim it back? Can anybody on here give a definitive answer?

 

[Jobsworth]

I’m not an expert, but I am vat registered. Afaik vat must be charged on new properties, and up to three years old. Past that it’s optional, but there is some consideration to be made, as if you opt not to charge vat you cannot claim back the vat on any related or incidental costs associated with the property sale. If the buyer is vat registered it would make some sense to opt for vat, as the main cost will be recovered, and the incidentals too. If not vat registered then opting for an exempt sale makes more sense. Happy to be corrected by those with more experience

 

[Red C220]

Before she goes any further she needs to determine the VAT status of the property, with evidence. This often isn't black and white.

Commerical property isn't straightforward like residential. Effectively triple the solicitors fees/surveyors fees to start with.

 

[pmcgsmurf]

If they are charging VAT on the property sale then it will be opted into VAT.
We did this when we built our factory so that we could reclaim VAT on purchases, any rental or sale of the property therfore has to charge VAT.

Recently bought another building where there was no VAT on the purchase, much older building.

First advice would be to speak to their accountant though.

 

[zipdip]

The lady in question is commended for her risk taking, buying a commercial premises to turn it into a restaurant at this moment in time given all that is happening VAT may well be the smallest of problems being faced.

 

[E55BOF]

It sounds as though the current owner opted into VAT, and that she does not, therefore, have the option to opt out. I presume the input VAT can only be reclaimed once the new business starts trading?

 

[pmcgsmurf]

It sounds as though the current owner opted into VAT, and that she does not, therefore, have the option to opt out. I presume the input VAT can only be reclaimed once the new business starts trading?

Not really, does not hve to "trade", just be registered for VAT.
Think you can actually reclaim for a period (6 months?) before being registered.

Again, I'd have her asking all this of her accountant, if she does not have one then best to engage the services of a good one now.

 

[DITTRICH]

She needs to speak to an accountant who specialises in property work. There is more written about VAT than everything else. Its complicated.

 

[moonloops]

It sounds as though the current owner opted into VAT, and that she does not, therefore, have the option to opt out. I presume the input VAT can only be reclaimed once the new business starts trading?

If her business is VAT registered she can claim the VAT back straight away. HMRC will start asking questions on when the business is likely to start trading and paying VAT to them. Been there, done that.

 

[neilrr]

The lady in question is commended for her risk taking, buying a commercial premises to turn it into a restaurant at this moment in time given all that is happening VAT may well be the smallest of problems being faced.

Indeed. She doesn't need a VAT expert, she needs a head doctor!

One of the hardest ways to make a living & one of the surest ways to destroy one's life is to open a restaurant, even if you're experienced. The hours are ridiculous (she'll basically end up living there), the staff will rob you blind, dealing with the public, food vendors, EHA staff, neighbours & more is a nightmare - just don't do it! The stats for depression, divorce, bankruptcy, suicide amongst restaurant owners are truly alarming. That's why there are so many 'restaurant rescue' type TV shows, there's a never ending supply of failed/failing restaurants with their broken owners!

Several people I know have learned this the hard way.

 

[keith of kent]

VAT is a very involved subject, I know, I used to work for Liaison VAT Consultancy. I met many very senior finance directors who knew all about accountancy, most were amazed with how much there is to know that they didn't.
So I don't think you want an accountant, you want a VAT expert.
I left the company many years ago so don't know how they operate now but you could do worse than to give them a call.

Liaison Financial (Accounting, VAT & Audits, Compliance)

Liaison Finance helps to provide greater savings through VAT savings, VAT consultancy, contract compliance, financial reviews, and more.

liaisongroup.com