New company, property purchase and VAT

Seanymph

We are buying a building that has opted into VAT.  So VAT is being charged on the purchase price.

We have applied to register for VAT.

Everything I read says we can only claim quarterly (and I don't have registration so don't know the date) but the VAT element I'd too big to pay out and wait months, or even weeks really, to get repaid.

I'm at a loss as to how to manage this.

The purchase is thundering towards completion, but I need to reclaim it straight away.

Can I?  Is there anything I've missed to make this easier?

DullGreyGuy

You can request to do monthly VAT returns rather than quarterly but it's normally for those with high volumes of transactions or complex VAT setups. Given it increases the administrative burden on both parties I dont know if HMRC will blindly accept the request or need evidence to justify the extra burden on them. 


Sounds like your cashflow projections dont support the purchase so maybe time to rethink the idea or raise more capital. 

Seanymph

The purchase is OK, it's 50k cash for the vat which is reclaimable that will impact us

Tucosalamanca

You always need to budget for gross costs, 50k is quite an oversight.

I've always discussed gross figures, the property costs £300k, not £250,000 plus vat.
The expectation is that you pay £300,000 on completion day.
I guess that you could try negotiating a payment plan, although the vendor probably won't be keen and legal fees wouldn't be insignificant.

When is the end of your first VAT quarter? With MTD, repayments should be made within 30 days (I find it usually takes around a fortnight). That £50k could be lost in the system for quite some time...

The best course of action was to be VAT registered before agreeing the purchase.
You would then have been able to plan completion dates around VAT deadlines.


Do you know what your insurance and business rates are likely to cost (to avoid any more surprises)?

Seanymph

Thankyou.  No, the vat registration is still going through, so I don't know when the end of the quarter will be.  We did budget for it, I'm just looking to be out 50k for as little time as possible.

TheSpectator

A company registering fot VAT and immediately claiming a large VAT refund is almost certainlly going to be looked at in further detail by HMRC. Just to manage your expectations that any refund is unlikely to be automatic and you will be asked to supply more information.

penners324

How are you funding this? If a business mortgage then the mortgage company can fund the VAT, repayable when VAT is returned by hmrc