VAT recovery on hotel repairs for limited partner

ditulis oleh : Jomblo Terhormat 04 Agustus 2013

Looking for a steer from any VAT specialists in the forum, thank you in advance for your assistance.
My client by dint of an inheritance is about to own a hotel. The estate has been distributed via a corporate restructure agreed by HMRC.

A newco has been formed and it will take ownership of the hotel building and a 'cash pot' equivalent to the value of agreed repairs required. He is under no obligation to complete the repairs but will choose to do so over the next 12-24 months. These repairs will cost in the region of £0.5M + VAT and this is where my question arises.
The Newco will be in a partnership with the existing family operators and will not charge rent, rather it will receive a fixed profit share of £80k p.a. then an agreed % share thereafter. The company is deemed to be a 'limited partner' and will be reassigned the existing limited partnership agreement from the estate. At all times going forward it will be the owner of the hotel.
My question is how to ensure that the newco contracts with the workmen for the refurbs to ensure it can reclaim the VAT. I am no VAT expert hence the query. 
Can  I assume that as there is no (exempt) rental, that the newco can claim to be involved in a standard rated supply and therefore reclaim all the VAT? This would make common sense as it is seen to be participating in a trade but this is obviously a material issue for the client. Can we obtain approval from HMRC in advance of the works?
Anyone with any pertinent advice out there would be appreciated.
Thanks very much indeed.

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