New queries, issue 4549

Café capers

Can a business register to recover input tax and deregister soon afterwards?

I act on behalf of a café operated by a company client which rents the business premises.

The company shareholders and directors have been advised that their landlord is willing to sell the freehold to the company for almost £70 000 plus VAT because the landlord has opted to tax. The café is not VAT-registered at present because turnover is below the registration threshold.

The suggestion is that the café should register for VAT and recover the input tax that it will be charged on the freehold acquisition. The café will not need to opt to tax because it will be a fully VATable business and is not taking over a going concern. The business could then deregister at some point and because it has not opted to tax the deemed supply on deregistration...