Our limited company is looking to purchase freehold a small office building for itself.   We have two questions: 1. The sales particulars say that the price for the building is 'subject to VAT'.  Can our company reclaim the VAT to be paid since it is VAT registered? 2. What is the most tax efficient method of purchasing this building?

1) If your company is going to use the building for its business to make taxable supplies (i.e. at 20/5/0% VAT - but not exempt) then it can claim back the input VAT on purchase. If the company decides to change the use of the building in the following ten years, so that it stops using it to make taxable supplies, then the ‘capital goods scheme’ rules will become relevant - see HMRC VAT Notice 706/2.

2) There are advantages in purchasing the property in the company: a) the VAT recovery, b) possibly 100% business property relief from inheritance tax. There are advantages in purchasing the property in your own personal name: a) the capital growth of the property will be yours - personally, and entrepreneurs' relief at 10% from capital gains tax for an associated disposal may be available when the property is eventually sold, b) the possibility of charging the company rent for use of the property (although this conflicts with entrepreneurs' relief).