Insights
How we've helped clients resolve real VAT problems. Details are anonymised throughout to protect client confidentiality.
A dispensing GP practice extending its surgery, where the architect’s initial plans put roughly £100,000 of VAT at risk of being largely irrecoverable.
A dispensing GP practice was planning an extension to its surgery, with around £100,000 of VAT at stake on the construction costs. Under the architect’s initial plans, the extension would have contained a mix of exempt medical consulting space and zero-rated dispensing space. Applied under the practice’s existing partial exemption special method, that configuration would have limited VAT recovery to around 12% — approximately £12,000 of the £100,000 incurred.
We reviewed the plans with the relevant stakeholders and worked through how the extension’s layout translated into VAT recovery under the existing method. Some shared and common areas were unavoidable, but we worked with the architect to reconfigure the space so the extension was used predominantly for dispensing activity, rather than a more even mix with exempt consulting space. We then agreed a new partial exemption special method with HMRC, securing recovery on the basis of floor space rather than use, to reflect the practice’s new configuration.
The changes to the extension’s layout, combined with the revised method, increased the practice’s VAT recovery from around £12,000 to £79,000 — an additional £67,000 recovered on the same construction spend.
A property developer converting a former office building into self-contained flats, where the VAT treatment of the conversion, the professional fees, and the eventual sales all needed to be right.
A property developer had acquired a site previously used as office space, with planning permission in place to convert it into self-contained flats. The VAT treatment of the scheme touched several different elements — the conversion works themselves, the professional fees incurred along the way, and the eventual sale of the finished flats — each carrying a different liability.
We advised on the VAT liability of each element of the scheme: the reduced rate of 5% available on the qualifying conversion works, the standard rate of 20% applying to professional fees, and the liability on sale of the individual flats, which depended on whether each was sold on a long lease (zero-rated) or a short lease (exempt). We also registered the developer for VAT, which was necessary to secure recovery on the scheme’s costs.
Getting the registration and liability position right across the scheme secured VAT recovery of approximately £450,000 for the developer.
A charity supplying staff to a subsidiary charity carrying out wholly exempt activities, where the VAT charged on that supply was an irrecoverable cost with no straightforward way to remove it without disturbing the wider group’s VAT position.
The client, a charity, supplied staff to a subsidiary charity and was required to charge VAT on that supply in the ordinary way. The subsidiary carried out wholly exempt activities, so it could not register for VAT and had no way to recover the VAT charged — the staff recharge was a straightforward, recurring cost. The client wanted to remove that cost, but without affecting the parent charity’s own partial exemption position.
After reviewing the group’s structure, we suggested moving to joint employment contracts between the parent and subsidiary charities. Where staff are genuinely employed jointly by both organisations, recharges of their costs between the joint employers fall outside the scope of VAT altogether, rather than being treated as a taxable supply of staff. We gave technical input to the client’s legal advisers, who put the joint employment arrangements in place.
The joint employment structure removed the VAT charge on the staff recharge entirely, saving the client approximately £40,000 in VAT each year, with no impact on the parent charity’s partial exemption method.
We offer a free 1-hour consultation to talk through your VAT position. No obligation, and every engagement is fixed-fee.
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