Is it possible to defer VAT on the purchase of commercial property? My bank manager says its what now everybody are doing, but I cant find any relevant information on HMRC websites. If this is possible then how this can be done? Do I have to opt to tax land and buildings first before processing further?
Replies (3)
Please login or register to join the discussion.
Sometimes
If it is the Transfer Of a business as a Going Concern then it is outside of the scope of VAT, and no VAT is chargeable. This is not your choice. It either is or it isn't a TOGC depending on the facts.
Check very carefully to see if the transfer is or is not a TOGC because, if it is, then any VAT that is purported to be chargeable will not be accepted by HMRC as deductible Input Tax by the purchaser. As the purchaser, there are steps that you may need to take to make it a TOGC, including opting to tax the property at the right time.
If VAT is chargeable then what sometimes happens is that, under the contract of sale, you don't have to pay the VAT to the Vendor until they have to pay it to HMRC, by which time you will hopefully have recovered it from HMRC as input tax on your next VAT Return.
Timing is critical and you should take professional advice as this is an area which very much depends on the detailed facts of the case and where mistakes can be very expensive.