VAT query

[PurpleMoonlight]

A VAT registered pension scheme builds a commercial property and reclaims the VAT on the build costs.

It then rents to property to a VAT registered Ltd.

No specific 'option to tax' has been made on the property.

Is the rent subject to VAT or not please?

[namtav]

PurpleMoonlight said:

A VAT registered pension scheme builds a commercial property and reclaims the VAT on the build costs.

It then rents to property to a VAT registered Ltd.

No specific 'option to tax' has been made on the property.

Is the rent subject to VAT or not please?

If no 'option to tax' has been made and notified, then the rent will be exempt.

HOWEVER, that means that the pension scheme should not have recovered the VAT on the build costs.

The property will inevitably be a Capital Goods Scheme item, so if an 'option to tax' is made in the next few years, the pension scheme may be able to recover a portion of the input tax.