Mixed use property conversion

A large bungalow was being extended and split to create a large HMO but VAT costs were an obstacle.

The project involved a series of mixed use existing properties in Herts & Berks were being variously extended and improved to create a large HMO to be let on completion.  This meant that VAT could not be reclaimed but as the property had not been empty for >10-years, full VAT claims could not be made.  By using and securing the two-year empty rule and tweaking the lay-outs of the building plan we were able to carve out some units that qualified as new build so no VAT on associated costs and maximise 5% VAT rate on the rest of the work which significantly reduced the resulting VAT costs on the whole development portfolio.

What do we do?

Our role is to help you understand how the VAT exemption, 0% & 5% relief rules work for a particular situation and bear the lowest possible VAT costs.  There are all sorts of VAT reliefs running through most sectors and you probably already know the rules relating to the property sector are both complicated and frequently misunderstood.  So these grey areas are where we work and were very evident in this project.

We often feel sorry for clients who are struggling to understand the very complicated rules surrounding property.  This client used property as an investment vehicle and had a very different day job.  This mix of responsibilities made getting hold of the VAT rules even harder – which is how we can help.

If you’re ever not sure about VAT related then please give us a call. Remember sooner is always better.

Posted in Case Study, Property, Property.