Your first post on the thread above was incorrect, but I didn't bother pointing out the error since you were essentially advising against claiming the input credit, however I can't let you off the hook on this one..!
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.
I presume both of these sentences are in reference to my post.
Just to clarify, I didn't imply that "any expenditure on a rented premises by the renter could not qualify for VAT deduction".
Expenditure on furniture or fittings would of course be deductible - the tenant company owns them, and can bring them with them if/when they vacate the building.
But expenditure on fixtures (
i.e. anything that becomes part of the property once installed, and can't be removed without damage to itself and/or the building to which it is affixed) or on refurbishment/development of the property, in the absence of such expenditure creating/augmenting a capital good for the party incurring it, will not give rise to any deductibility. Since the company has no enforceable interest in the property, it cannot be the owner of the capital good created by the construction / refurbishment of the garage/office.
Based on Ninak's OP, she is talking about construction costs of the garage/office space, including insulation. There is no question of deductibility for the limited company, as it holds no interest in the asset. No more so than if the company's money is used to buy a van for the director (or the friendly next door neighbour, or whoever), on the basis that the company will occasionally get to use the van for free on an ad hoc basis.
I mean, just step back for a minute and think about what you're saying. Let's say the company go ahead and claim an input deduction on all the building costs including the insulation. And in 6 months time Ninak and MrNinak decide to sell the house (and garage/office which is part of the same property). What is the position then? Are Ninak and MrNinak obliged to account for VAT on the sale or some part of it even though they haven't actually carried out any development or received any input deductibility, or is the company obliged to account for VAT even though it is not making any taxable supply, since it has no legal interest in the property which is owned by Ninak and MrNinak...?? (I'm afraid it's you who's being absurd!
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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.
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.