<br />Hi, Just wondering if I am able to claim back any of the below through our LTD Company. We recently built on a garage at the side of the house. We have divided it in two, with room for a small office for my husband to work out of. We run a Ltd. Co. from our home at present. We are both full time employed in the Co. We were going to look for an office space to rent, but decided to try this instead. As a result of this decision, we increased, at some cost, the insulation in the roof and walls of the garage. We also ran heat and power in. <br />
My question is if I can firstly claim back any of the Vat paid, say for the extra insulation, through the business? If so could I claim Vat back on all building costs,or just those that went in because it is to be used as an office.<br />
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Also, can I claim any of the building costs as a business expense? Or could I possible have the business pay us as the building owners, rent for the portion of office space?
I am considering just claiming back the VAT on the extra insulation that went in and putting the insulation cost down as an office expense. I am not going to charge any of the building costs, materials or labour, just the extra insulation.
I suppose my point was that these costs were only incurred as we will use the garage as an office, otherwise we would not have bothered putting in that insulation. It could be argued that they were a cost directly related to the business and choosing to run it from home instead of an office. But if this argument is inaccurate from Revenue's point of view then I will just take the extra cots incurred as a personal expense rather than a Co one. As you say, it is not a great saving that we are making, and I would rather not do it if I was sure it was incorrect, but in this environment, any saving is helpful and worth thinking through.
The Revenue position would be illogical as it would imply that any expenditure on a rented premises by the renter could not qualify for VAT deduction which is absurd.
The proximity of the relationship is what the poster is referring to and I think he may be over interpreting here.
Of course they don't, but it is Revenue's job to apply the legislation, which by necessity involves interpretation in the first instance, subject to the courts arbitrating when due process requires it.Currently as far as I am aware the Revenue do not sit in the Courts as judge are not therefore the arbiters of legislative interpretation.
The whole point about the 'extension' (i.e. permanent as opposed to what can be removed) does give rise to an interest in building - hence I was referring to CGT on disposal. Therefore there is the interest and they could get a deduction for the inputs. There are the complications on sale as I referred to and for those reasons I would not do it myself. Now that you have raised it - if the sale arose it would be sold as PPR presumably so VAT would not apply to the sale. The complication I did see was the interest that the company had acquired. And because the gain for the company would not be indexed (a savage imposition) then at the the CGT rate which is far larger than the VAT rate and even allowing for the time value of money it would still be larger. I therefore would not do this and because of that I was able to step over the VAT. Potentially as you have raised it, there could be a VAT element on the equitable interest acquired by the company but they could get around that by deregistering before the sale.
By the way when I think you are wrong I regard it as interpretation on your part. Hence you and I would be in and out of the Appeal Commissioners and the Circuit Court
Technical point: An equitable interest may arise even if there is no legal ownership. [Revenue hate this!]
I think we will have lost the audience (if there is one) by now.
We agreed that a deduction for VAT would be possible with respect to the moveables.
I pointed out to the Poster that if he were to seek a deduction in respect of the the immoveables there would at the very least be a CGT problem on a sale if the Company were involved.
Sticking with that I viewed the potential CGT as a far worse situation than the recovery of the VAT and for that reason I would completely avoid it.
And a simple equitable interest would arise where house owner writes a note saying I am giving 10% of the house to X Ltd in consideration of their paying Y for improvements. Assume that is how it arose and is a proper document for the purposes of the Statute of Frauds (Ireland) Act.
The company can claim it on the moveables because they own them. If I buy a desk for the office you're letting me use, then it's my desk and of course I'm entitled to my input credit.You then say that the Company could not have claimed the VAT anyway. I am saying that they could. (How could they claim it on moveables and not immoveables if there is an equitable interest?)
I think we will have lost the audience (if there is one) by now.
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