Building erected as an office at home?

[chrisl]

I am have a building erected as a business office (its basically a garage fitted out, price of around £7000 + VAT. Its for sole business use, so want to charge the £7000 as an expense and claim back the VAT element, I am VAT registered.

Can I do this, on 100% of the cost?

How do I do the mechanics of actually paying the VAT element, do I just expense the claim and u process the claim and repay me the VAT element from my VAT account?

Do I pay the full cost plus VAT?

Hope you can help.

Cheers

[tim123]

I am have a building erected as a business office (its basically a garage fitted out, price of around £7000 + VAT. Its for sole business use, so want to charge the £7000 as an expense and claim back the VAT element, I am VAT registered.

only if you want to be business rated on this garage

tim

[Diver]

only if you want to be business rated on this garage

tim

and then there's planning consent for change of use.

Informing the water company that it is a business premises for water rate purposes etc.

[[email protected]]

and then there's planning consent for change of use.

Informing the water company that it is a business premises for water rate purposes etc.

and when/if you decide to sell your property, there is the possibility of capital gains tax arising.

[ASB]

And it wouldn't be an expense anyway. It's an asset purchase. Consider claiming deduction for some/all of the the running costs.

[malvolio]

And should you plan a major business cost without knowing the absolute basics of VAT accountancy?

(and is this post actually a copy of a letter to your accountant/umbrella?)

[chrisl]

So basically the best way is to pay for it personally then and just claim the normal use of home as office?
Its just a lot to pay out and would be nice to get something back on the money spent.

[chrisl]

??

[Sockpuppet]

So basically the best way is to pay for it personally then and just claim the normal use of home as office?
Its just a lot to pay out and would be nice to get something back on the money spent.

Then rent some offices if you want "something back".

[ASB]

So basically the best way is to pay for it personally then and just claim the normal use of home as office?
Its just a lot to pay out and would be nice to get something back on the money spent.

Ok, you are making available a personal asset for business use and feel you should be compensated. That's fine. And you can be.

Your company can rent the office from yourself at a market rate. This is an expense from your company. Assuming you can reasonably accurately detect how much electricity etc is used by the office these are all claimable. As is insurance council tax etc. Basically everything to do with running it. However when you get into apportionment of joint costs (e.g house insurance t can get very difficult to justify these - but your accountant will be available to advise.

Of course you need to take a view about business rates if there is sole use of the office for business. If you are a fairly typical contractor then this probably won't apply - but you will need to discuss your usage with your authority in order to ascertain how they view it. Business rate get very expensive very quickly.

However, the rent is of course taxable income in the hands of the recipient. You might take the view that up to 4k a year it is covered by the rent-a-room scheme. This would be unwise. [Of course this doesn't really help you, you are simply saving CT on the rent in order to pay personal income tax which may well be higher]

Now, if you want to get creative (the chances of this being cost effective in the long term are probably nil) - you will need to have a very detailed chat with your accountant. You could investigate:-

- You personally sell a lease on the ground it stands on to your company. You need to account from this income on your SA return. Also the ongoing ground rent.
- Your company builds the building. This is then treated as any other building project. The VAT may or may not be reclaimable depending upon the normal rules. You'll need to look 'em up on HMRC web site.
- You depreciate the building in accordance with whatever accounting policy you put in place. The tax treatment of that is dependant upon statute of course.

There are some issues here of course. The building has an independent value. Part of that will be governed by the lease conditions. The notional value of the building at the end of the lease is of course nil since it reverts to you. This is not likely to impress HMIT if you grant a short lease (or probably even a long one in fact).

In the event of the sale of your property you have devalued it, your co has the right to continue it's usage. You could get round this by careful drafting of the lease.

The chances are the you will have a hard job finding any arrangements which HMIT won't simply look through, but you never know. Your exact circumstances might allow it.