Reclaiming VAT on property

No VAT registered at date of acquisition and therefore no option to tax

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I have recently taken on a client who has a VAT issue. The scenario is as follows:

VAT registered company which they own transferred its commercial property (for £200k) to their pension scheme three years ago and did not charge VAT even though it had been opted to tax.

HMRC are now stating that quite obviously VAT should have been charged and have raised assessment plus interest and penalties.

Pension scheme is not VAT registered (therefore no vat has been charged on rent) and I understand that although you could backdate VAT reg, you cant with an option to tax. TOGC probably would have applied at the time had it been done correctly.

Can I register the pension scheme for VAT now, opt to tax the property and try and reclaim 7/10 of the VAT on the basis that for the last three years the purchase was for an exempt supply? Are there any other options?

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