How we recovered £42,000 of VAT for a Paddington serviced-apartment business
Client K runs a serviced-apartment business near Paddington station letting to business travellers and tourists. The previous accountant had been treating all the income as exempt residential letting and not registering for VAT, missing both the output VAT obligations and - more importantly for the client - the input VAT recovery on a substantial refurbishment of the apartments.
We reviewed the VAT treatment. Serviced accommodation provided to guests for short stays (similar to hotel accommodation) is standard-rated for VAT, not exempt residential letting. This meant the business should have been VAT-registered - but it also meant the substantial input VAT on the refurbishment (kitchens, bathrooms, furnishings, professional fees) was recoverable. We registered the business, accounted for the output VAT correctly and reclaimed the refurbishment input VAT.