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bigduckontax
bigduckontax, Accountant
Category: UK Tax
Satisfied Customers: 3282
Experience:  FCCA FCMA CGMA ACIS
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I am building a new home and intend to move into it shortly.

Customer Question

Hi
I am building a new home and intend to move into it shortly. I will then do up my old house and potentially sell it or let it out. However I have been asked by friends if they can live in the new house for 5/6 months whilst there new house is being completed. I'm afraid if I accept their request that the new build will be deemed as a commercial deal and as such I will have to repay the VAT that has been reclaimed by my contractor. Can you advise me ?
Submitted: 6 months ago.
Category: UK Tax
Expert:  bigduckontax replied 6 months ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

If they occupy rent free for a short period then you have nothing to fear. That would be my solution to this conundrum.

I do hope that you have found my reply of assistance.

Customer: replied 6 months ago.
What if I charged them rent for the period? As I say I had not intended to do this but it could be a win/win all round?
Expert:  bigduckontax replied 6 months ago.

I would suggest that charging rent would be most inadvisable and might put your VAT refund st risk.

Customer: replied 6 months ago.
Well is there a way around this...for example I am going to pay the council tax staring 26th August and the utility bills are already in my name. Also I have not reclaimed the VAT but rather my contractor has not charged me as it's a new build. So would this not get over the hurdle. If not then would I have to pat the VAT immediately or when the house was sold?
Expert:  bigduckontax replied 6 months ago.

Probably, but remember I am giving you the 'belt and braces' advice! Emulate Brer Fox 'For he lay low and say nuffin!'

Customer: replied 6 months ago.
if the vat is repayable is it immediately or once the house is sold?
Expert:  bigduckontax replied 6 months ago.

Well, as you never claimed it, was just never charged it, then the builder would be liable and then bill you. The builder would have to settle within the normal quarterly VAT time frame.

Customer: replied 6 months ago.
In truth.... I am
None the wiser than when I started this conversation. I was aware of all the ifs, buts and maybe's and wanted some options. Thanks anyway