Accounting Flashcards
1
Q
What does elect for VAT mean?
A
Commercial property is typically exempt from VAT. Where VAT exemption applies, the purchaser or tenant does not have to pay VAT.
Landlord are unable to recover VAT incurred on related costs
Landlord can opt for VAT allowing them to recover VAT
2
Q
Why would a landlord elect VAT?
A
Landlord can recover VAT incurred on costs related to the property.
E.g is significant funds have been spent on the refurbishment of the property, then the VAT could be recovered
3
Q
What is a downside to electing to VAT?
A
Some businesses will not be able to recover VAT incurred on costs, e.g financial services, insurance, health and the charitable sector
