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Is This Subject to VAT?

Is This Subject to VAT?

Hi all,

I hope someone could be so kind as to assist with this:  I understand that if a Bed & Breakfast (Commercial Premises) is sold by the owner to another person that the sale is subject to VAT if the premesis are to be used for anything other than a B&B and is not subject to VAT if sold to another party whom will continue to operate as a B&B.  I may have misunderstood this and could be completely wrong.  Could anyone Clarify?

Assuming that the above is correct - How does this translate to a situation where the Premises have been handed over to a fixed charge receiver for the Bank with the business having closed and then being sold buy the FCR for the Bank.  i.e. is there any VAT invovled?

Thanks in advance for any response.




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29th Dec 2012 21:00

Check status?
What you are describing is the principle of TOGC - Transfer of Going Concern - as it applies to commercial premises.

However in general in only applies if the property has been opted to tax in the first place; although its not impossible, it would unusual for a B&B to have been opted.

So first thing, is check if the property is opted? If it is, then the next question is the supply to the mortgagor and, alas, off the top of my head I can't answer that one, however it strikes me that, under first principles, the mortgagor, and it's receiver as agent, don't take ownership of the property - they are merely forcing a sale to release their security. I would therefore expect, if the property was opted, that the sale by the receiver would be a supply by the now ceased business.

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01st Jan 2013 11:37

TOGC or not?

If the building is 'transferred' to the bank, the business having closed, then there is no TOGC. The question (as per the previous post) is whether the Vendor has opted to tax. If not, then the supply is VAT exempt (with a consequent restriction on input tax).

This is one of those situations where the taxpayer should have a VAT/tax specialist look over the papers. It has to worth a reasonable fee to avoid a nasty surprise!

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