Andrew Needham looks at how VAT recovery on an asset alters with a change in its use.
Suppose that a business purchased an asset (e.g., a building) for a project expecting to use it in its taxable business, and recovers all the VAT on the purchase.
However, circumstances change and it no longer needs to use the building and decides to sell it to a housing association for redevelopment. It cannot opt to tax and so the sale is an exempt supply. The change of intention takes place two years after buying the property.
