Readers’ forum: VAT cost of converting an office building

Student accommodation

My client is an incorporated property investor who has just bought an office building and intends to convert it into self-contained living accommodation. He is concerned about the VAT cost of this. I have suggested that it may be possible to convert the building from its previous use as an office into student apartments with say shared kitchens and then make a disposal of the building as a whole to a separate limited company owned by him on the basis of the first grant of a long lease in the building. This may be a zero-rated supply which would facilitate reclaiming the input VAT incurred on converting the building into student apartments.

My question is whether this strategy would work for VAT purposes. In addition would it make a difference if the building were converted into self-contained apartments as opposed to student accommodation? I have...