Repaying reclaimed VAT on investment property

I bought an investment property in the past and I registered for VAT.

Registering for VAT means that I must pay out VAT on my monthly rental income.

I am now thinking of moving into this property as my PPR.
Therefore I will no longer be renting it as I will be owner occupier.

I still owe a large portion of the VAT i originally claimed back.

How do I now pay this back to the VAT man?

I don't have a lump sum to pay him back.
However - I can continue to keep paying the monthly installments I have been paying all along.

Should I just ring him up and come to an agreed nominal monthly repayment amount?

Has anyone experienced this in the past?

You're going to be hit with a large-once off VAT bill.

You're taking it (the house) from a business-use to a perosnal-use (a 'self-supply') and are now liable to make good, what was in effect an interest-free loan from the Revenue to you.

Ok - I don't have a lump sum to give the revenue.

So what next?

I can however keep making monthly payments as I am currently doing.

What is the most likely course of action the revenue will take?
Will they agree to a nominal sum to be repaid each month?

{Presumably they will accept this ?

As in - what's the alternative to them?
I don't see any alternative.

Or am I missing something?

Hi,

the alternative would be for them to force you to sell the property. They may also start to charge you interest on the money. Revenue have plenty of options and you dont wont to get on the wrong side of them. You should consult an accountant/tax adviser before you proceed.

Will the amount of VAT to be repaid be restricted to the balance of VAT reclaimed less VAT accounted for on rental or would there also be VAT on the value of the house at date of deregistration?

That is the crux of the issue here - a very good question indeed. If he can deregister before selling the house - he'll only repay what he effectively owes.

Otherwise if he's to sell the house, he has to pay ALL the VAT which would be deemed to be included as part of the selling-price of the house!!!

The amount due back will be the balance of what has been reclaimed.