VAT Property Solutions
Note: 31
You must account for output VAT as appropriate on free supplies of land or buildings forming part of your business assets where these are transferred or used free of charge for a private or non-business purpose. The test is: were you were charged VAT on the purchase, reconstruction or refurbishment of the land or building? Did you treat the VAT as input VAT, without making a non-business restriction? Would your supply be standard rated?
A transfer or disposal of land or buildings may be standard rated ((17.5%) see Decision Tree). The value on which output tax is due is the market value at the time of disposal).
The charge for making the building available for free of charge private or non-business use is always taxable. The amount of the charge is equal to the proportion of the input VAT deducted on the building that is attributable to this use. Where the VAT was incurred post 9 April 2003, input VAT recovery should have been restricted to the intended business use of the land or building. An adjustment will only be required where the intended use subsequently changes from fully taxable use to include non-business use. (Contact 4 Eyes Ltd if this is relevant).
A transfer or disposal of land or buildings may be standard rated ((17.5%) see Decision Tree). The value on which output tax is due is the market value at the time of disposal).
The charge for making the building available for free of charge private or non-business use is always taxable. The amount of the charge is equal to the proportion of the input VAT deducted on the building that is attributable to this use. Where the VAT was incurred post 9 April 2003, input VAT recovery should have been restricted to the intended business use of the land or building. An adjustment will only be required where the intended use subsequently changes from fully taxable use to include non-business use. (Contact 4 Eyes Ltd if this is relevant).
Contact: info@4eyesltd.co.uk Telephone: Phillip Henwood - 0044 (0)7793 707 839
Next page: VAT Decision Tree