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• # 117424
• Mon 07 Jan 2019 09:33 AM

I have a client who has bought a guest house and is converting it to three flats which will be let. His company is vat registered, he will not be charging vat on the rental income. I assumed that he could not reclaim any vat on the conversion costs, but he tells me that he can claim 5%? I have struggled to find the answer on HMRC website. Can anyone help?

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• # 117440
• Fri 11 Jan 2019 08:27 PM

SusyC said:

“I have a client who has bought a guest house and is converting it to three flats which will be let. His company is vat registered, he will not be charging vat on the rental income. I assumed that he could not reclaim any vat on the conversion costs, but he tells me that he can claim 5%? I have struggled to find the answer on HMRC website. Can anyone help?”

Hi Susy 

It would probably be best for your client to get advice from a tax professional because this is a complex area.  There are some ways of reclaiming VAT on building conversion work but there are strict criteria which your client may not meet and there could be serious consequences if VAT is reclaimed incorrectly.

Hope this helps

Elizabeth

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• # 117441
• Fri 11 Jan 2019 08:39 PM

Thanks for that Elizabeth, that’s exactly what I’ve advised him to do! 

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