My client owns a commercial property which is leased to an unconnected tenant, with about 5 years left on the lease . The client plans to sell a 20% beneficial interest in the property to his pension scheme. The property has been opted to tax by the client. Does he need to charge VAT on these proceeds or will it qualify as a TOGC?
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Partnership?
Where is the whole or part of a business which is being transferred? The letting will obviously continue but will the current 100% owner still be responsible for invoicing all of the rent and handling the payments? If so, the pension scheme might not be said to have a business at all. That would mean no TOGC. Sale of a 20% interest seems to me more like the sale of an asset of the business than a TOGC of part of a business.
Will the current owner and the pension scheme enter into partnership together to let the property? If so, should there be a partnership VAT registration and there could perhaps be a TOGC to it. And if the current owner makes no other taxable supplies then perhaps he could transfer his VAT regsitration to the partnership.
That's a TOGC
You should be able to TOGC the property to the partnership. P'ship VAT reg application should be completed on that basis.
If the value of the 20% interest is £150,000 or more (incl VAT), then the TOGC saves you some SDLT as well as easing the cash flow.