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VAT when a company purchases land and rents this to an associated company.
My client (A Ltd) rents a trading property from a third-party landlord. A separate landowner has given the director of A Ltd the opportunity to buy a plot of land next to the trading property. However the director would prefer to do this through a different entity – say B Ltd. This company will pay for surfacing and drainage on the land and will then buy and install a special tent which will be used by A Ltd for storage and possibly for some office use.
A Ltd will pay a commercial rent to B Ltd.
My concern is VAT. How can B Ltd reclaim input tax on the costs of the project which are likely to be £100 000 exclusive of VAT? Is an option to tax election necessary or will the income be standard rated by statute because it relates...
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