vat is money down the drain can i save it.

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oaky9

Registered User
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i am a director of a company which runs a pub and the vat liability for july august is 7k the company is relatively cash rich to the tune of 100k. would it make sense to buy a site and build a house and claim back the vat on labour and materials to reduce the vat bill. when the house is finished then sell the house or maybe rent it . is this a viable idea
 
Whatever about the idea being viable, you certainly won't save any vat by doing so. Any eventual sale of your house & site will trigger a vat liability on the sale proceeds. You cannot reduce your J/A 2007 vat bill by incurring expenditure at a later date.
 
Vat is not a cost to you ,it is your customers that pay the vat.

That is like complaining about the PAYE you have to pay over for your staff
 
You are simply acting as a collector of VAT on behalf of the Revenue.
You could build a house, reclaim the VAT and rent it. The rents would attrach VAT but you would have the advantage of all the input credits from the build already claimed. This would result in a positive cash flow advantage to you (a bit like an interest free loan). However as the other poster pointed out, you will also be liable to VAT on the eventual sale of the property.
 
Rents on short term (less than 10 year lease) on residential property DO NOT attract rent and so, if you planned to let the house on a short lease, you can not reclaim the VAT incurred in building it.
 
Nige, have they done away with the option to waive the exemption to VAT on short term lettings ?
 
so what is the best option . if for example i wanted to build a large house over a five year timeframe and did it gradually with a few contractors and for example spend 10k every 2 months of company money which would save approx 2k in vat every two months (labour at 13.5% and materials at 21%). After 5 year it would have cost 300k (10kx6 x5year). Then there is a house after 5 year and i would have kinda saved paying 60k vat. does this make sense to anyone.how long do i need to rent it before selling it .
 
capall said:
Vat is not a cost to you ,it is your customers that pay the vat.
Click to expand...

As stated VAT has nothing to do with your business, you simply collect it for
the revenue.

If your VAT bill is 10K or 100K it makes no difference as the money is never
yours and you cannot benefit from it.

If you reduce your VAT bill to 0 it still will do nothing to benefit the business.
 
oaky9 said:
so what is the best option . if for example i wanted to build a large house over a five year timeframe and did it gradually with a few contractors and for example spend 10k every 2 months of company money which would save approx 2k in vat every two months (labour at 13.5% and materials at 21%). After 5 year it would have cost 300k (10kx6 x5year). Then there is a house after 5 year and i would have kinda saved paying 60k vat. does this make sense to anyone.how long do i need to rent it before selling it .
Click to expand...

Have you read any of the replies you've been given
How you are running a successful business is beyond me
 
Well the be fair the OP only said s/he was a director of the company, not that s/he is were running the business. Hopefully s/he is not. :)
 
As many posters have already said. The VAT is not your or your Business' money.

I cant understand your reasoning to "Save" approx €60K VAT by spending €300K to do so?

As many have said even if you do there will be VAT implications on any sale and therefore you wont have saved anything, just delayed it and created a higher liability for yourself.

What you are planning and the reasoning behind it makes absolutely no sense to me.
 
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