Andrew Needham explains that a SIPP or SSAS that purchases property can register for VAT and recover the VAT on related costs.
It is common practise for pension funds, in the form of a self-invested personal pension (SIPP) or small self-administered scheme (SSAS), to purchase commercial properties and rent them out using the rental income to finance the pension fund with the building held as an asset of the fund.
Registering for VAT
A commonly asked question in these circumstances is: ‘can the pension fund register for VAT?’ The simple answer is ‘yes’. A pension fund is treated in the same way as any other type of legal entity undertaking a business activity for VAT purposes and can register for VAT, reclaim input tax and submit VAT returns in just the same way as a normal business.
