Sheldon Bosley Knight have particular expertise in Class Q and Class R conversions, which are permitted development conversions for residential and commercial uses, respectively. There are instances where permitted development is not available.
One example is Woodlands Farm in Long Compton, which is owned and operated by James Walton, one of our directors. The farm lies within the Cotswold Area of Outstanding Natural Beauty. Planning permission has been obtained to diversify a 10,000sqft modern former cattle building for warehouse use, converted to a storage facility. Due to concerns expressed by the planning officer over the visual tranquillity of the AONB, the planning application required specialist consultancy advice for traffic and noise, and additional conditions apply to the planning consent. Similar projects prompt consideration of other issues before any building work is undertaken to facilitate a change of use.
Normally, VAT cannot be reclaimed on building work of this nature, unless an election to tax for VAT has been made in advance. The VAT status of the building is then maintained indefinitely. VAT must be charged on rents and on a sale, if this ever takes place, which is an issue particularly for larger, more expensive conversion projects. However, for a prospective tenant, VAT registration is often of no consequence where such tenant is also registered and can reclaim on rent demanded.
Succession tax planning also gets overlooked often. Unless the Government makes changes to tax regimes to financially recover following coronavirus, there remains an opportunity to transfer agricultural assets whilst holding over for capital gains tax, meaning there is no tax payable if the transfer lives for seven years. Conversion of the building, which will no longer be in agricultural use, does not benefit from Agricultural Property Relief, otherwise available on farm buildings.
Further advice is available on planning and succession matters from the dedicated team of experts at Sheldon Bosley Knight, call 01789 387887.