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17 June 2014
To what extent can input tax be recovered on building renovation costs?
My clients renovated and fitted out an empty shop as a restaurant in September/October 2011 and started trading in November 2011. They registered for VAT from 1 November 2013.
On the first return they claimed VAT inputs on “set-up costs” totalling £8 670.36 which included inputs on equipment furniture fittings and general refurbishment of the property.
HMRC are attempting to disallow the following items.
- £165.26. Installation of kitchen extractor canopy including reworking as necessary on site.
- £1 784.28. Electrical work including all labour (£4 511.50 plus VAT) and materials (£4 409.90 plus VAT). This included complete re-wiring installation of three-phase electrics supply of lighting heaters fans and extractors.
- £160.00. Installation of refrigeration units.
HMRC state that the above items are non-deductible because they are a supply of “services” and are...
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